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Welcome to this edition of Update, a publication of the Payment Cards Center highlighting recent activities. Update complements the information available elsewhere on this website, including a complete list of the PCC's papers.
Throughout its five-year history, the Payment Cards Center has always placed special emphasis on building relationships across a broad spectrum of individuals and organizations with interests in consumer credit and payments. These partnerships include financial institutions, payment services providers, consumer advocacy groups, academic institutions, and regulatory agencies and other government entities. In many ways, these relationships have become our most valued asset, allowing us to learn from and leverage the knowledge of others.
Past issues of Update have highlighted the value of these relationships and the synergies that arise when various groups gather at PCC-sponsored conferences. In this issue, we focus primarily on the important relationship the PCC maintains with one of these groups: the research community. This diverse group includes economists, lawyers, statisticians, and public policy researchers whose interest in the field ranges from the theoretical to the practical.
Our relationship with the research community is perhaps our most natural. The Philadelphia Fed and the Federal Reserve System are well known for their economic research. Many of our Philadelphia Fed economists have an interest in the field of consumer credit and payments. Working with our colleagues in the Research Department, the PCC cosponsors a biannual conference highlighting new research in the field by scholars from academic institutions, the Federal Reserve, and other relevant entities.
In this issue, we highlight research by Robert Hunt, a senior economist at our Bank. Bob has recently been exploring issues associated with the options available to distressed borrowers. In a recent Business Review article, he examined the history and economics of the credit counseling industry and the changes the industry is currently undergoing. More recently, Bob’s research interests have led him to examine the collection industry and its relationship to credit card markets.
Economist Wenli Li, another colleague in the Bank’s Research Department, is also interested in distressed borrowers. In this issue, we describe her recent work testing the effects of different modifications to our bankruptcy system.
Finally, Federal Reserve Board economist Thomas A. Durkin visited the PCC in May and shared his current research on the challenges to crafting minimum payment disclosure regulation as mandated by the new bankruptcy law.
Overall, the PCC strives to leverage the Federal Reserve’s reputation for academic research to support and promote research into areas relevant to consumer credit and payments. One way we accomplish this goal is by sponsoring a visiting scholar program that gives academic researchers an opportunity to visit the PCC and interact with Research Department economists, PCC staff, and other Bank professionals. Since 2001, the PCC has invited five economists to participate in the program. This summer, two academic researchers joined the program: Ronald Mann, a law professor at the University of Texas and Jonathan Zinman, an economist at Dartmouth College. We are pleased that these two accomplished scholars are joining us, and, in this issue, we highlight some of their recent work.
In a further effort to support the research community, we have been developing tools to assist efforts to extend the literature. In an earlier issue of Update, we described our endeavors to maintain an up-to-date, searchable bibliography of relevant papers on consumer credit and payments. In this issue, we describe a series of papers by PCC analysts Mark Furletti and Christopher Ody devoted to examining several sources of consumer credit data and macroeconomic indicators on which researchers in this field frequently rely. We hope that researchers contemplating work in this area will find these papers of value.
Our research partnerships extend beyond the Bank to include collaboration with other Federal Reserve colleagues. Later in this issue, we highlight one such collaboration between Industry Specialist Julia Cheney of the PCC and Economist Sherrie L.W. Rhine of the Federal Reserve Bank of New York. Julia and Sherrie recently coauthored a paper on the role of electronic payments in delivering financial aid to victims of Hurricane Katrina. Following publication of this paper, the authors have been invited to discuss these issues in a variety of settings. As noted later in this issue, themes from the paper and the subsequent forums ultimately led to a major conference on the subject, held at the Bank in early May.
Overall, supporting research in the areas of consumer credit and payments is an essential element of our mission. Good research can lead to more productive discussion of important issues and can be a valuable guide to policymakers.
We hope you enjoy reading this issue of Update, and I welcome your suggestions on how we can further add value by increasing understanding of the dynamics underlying this important sector of the financial services industry.