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When faced with a financial crisis, consumers more often are opting to pay their credit-card bills first before turning to their mortgage payments, according to a report released by Trans Union Wednesday.

In the past, strapped consumers typically would let their credit cards slide and make sure their mortgages were covered, said Sean Reardon, the study’s author and a consultant at the Chicago-based credit bureau. But those priorities flipped in the first quarter of 2008, according to the study, and the trend has been picking up steam.

In fact, 6.6% of consumers were delinquent on their mortgages, but current on their credit cards in the third quarter of 2009, according to the most recent data available. Meanwhile, just 3.6% were behind on their credit cards and current on their mortgages.

Why the change? A "perfect storm" of deteriorating housing prices and rising unemployment is likely the reason, Reardon said. It’s much easier for consumers to walk away from mortgage payments when their homes aren’t building equity, he said, than to neglect their credit cards when that may be the only way they’re covering daily expenses.

Just two years earlier, in the third quarter of 2007, the situation was reversed: 3.95% of consumers were delinquent on their mortgages, and current on their credit cards, while 4.6% were behind on their credit cards and current on their mortgages.

In California and Florida — two of the states hit hardest by the burst housing bubble — consumers were even more likely to pay their credit cards before their mortgages.

In California, 10.2% were delinquent on their mortgages but current on their credit cards in the third quarter of 2009, vs. 2.7% in the reverse situation. In Florida, 12.4% were behind on their mortgages and current on their credit cards, compared to 3.9% in the opposite situation.

Trans Union conducted the study among consumers that had at least one credit card and one mortgage, and examined 30-day credit card and mortgage delinquency data between the second quarter of 2008 and the third quarter of 2009.  

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Former Federal Reserve Chairman Paul Volcker said Thursday that more needs to be done to regulate the financial system before the lessons of the recent crisis are forgotten.

"We must not shrink away from change but accept the need for basic financial reform," said Volcker, currently chairman of President Obama’s Economic Advisory Board, in remarks to the Economic Club of New York.

He said the economy appears to be growing slowly, and that the financial crisis is beginning to seem to some like a "bad dream."

But the magnitude of the crisis showed that the underlying problems are "more fundamental" and require "broad reform" of the financial system, he warned.

The former Fed chairman said the central bank should play a key role in overseeing the financial system. Among his ideas, he said the Fed should have the power to dismantle big banks that pose a systemic risk to the economy.

"The old question (about banks) colloquially described as ‘too big to fail’ looms larger than ever," Volcker said.

In a response to recent criticism of the Fed, he said the central bank is less subject to political pressure than other regulatory bodies.

"These days, best-selling books remind us that the challenges to that structure, and particularly to the Fed’s insulation from political pressure, arise from time to time," Volcker said, referring to a popular book by Rep. Ron Paul, R-Texas.

"The sense of anger about the amount of funds required to bail out both institutions and markets is palpable," he added. "But that truly exceptional response to the financial crisis — drawing on long-dormant emergency powers — was a properly coordinated decision with the administration, not a misuse of independent authority."

The remarks came on the same day that President Obama called on Congress to tax the largest banks to ensure that U.S. taxpayers don’t lose a penny from the federal bailout of the financial, auto and insurance industries over the past year

Volcker said the proposed tax "seems to me to be a not unreasonable response." He said the banks subject to the tax have benefitted from taxpayer aid and "should carry their share of the burden."

The proposed "financial crisis responsibility fee" is aimed at large institutions that received significant federal aid during the height of the crisis, but have since recovered and are now poised to pay tens of billions of dollars in bonuses.

On Wednesday, four top bank chief executives went before a panel to answer questions about the role their institutions played in causing one of the worst financial shocks in a generation.

The CEOs of Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500) told the Financial Crisis Inquiry Commission that they made mistakes but didn’t realize how bad they were at the time. 

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Target Corp. on Friday announced a new national TV delivery and installation service.

Target (NYSE: TGT) customers who purchase TVs in-store can have the products shipped to their home and installed staring at $99.

The nationwide service is part of a growing partnership with Minneapolis-based Zip Express. The two firms joined up in 2008 to deliver and install TVs that customers purchased over Target.com.

According to the firm’s web site, Zip Express has 16,000 installers from coast to coast and delivers to every U guaranteed online personal loans.S. ZIP code.

Some prices for Minneapolis-based Target’s services include:

• Any size TV delivery and setup - $99
• TV in-wall installation - $199
• Delivery and wall mount - $249
• TV recycling - $50
• Video game counsel set-up - $99

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General Motors of Canada Ltd. has not reversed any of its decisions to close dealerships across the country after some store owners requested management reviews.

GM spokesman Tony LaRocca confirmed Monday that 38 dealerships had objected to the company’s wind-down offer and most have pursued management reviews, but the automaker has not yet changed its closing decisions.

"None of them have been reversed so far," said LaRocca, GM’s director of communications. "But the point of a management review is to look at all the available information, so if something new is presented, then a reversal can’t be ruled out."

LaRocca said 26 dealers requested management reviews and seven have resolved their objections by accepting wind-down offers providing partial compensation for closing before the end of last year.

"In other words, those dealers felt our offer was fair after review."

LaRocca added that three other dealers that initially pursued reviews are taking their cases to mediation and the industry’s National Automobile Dealer Arbitration Program.

He said GM continues to talk to 16 other dealers in efforts to resolve their cases. That could lead to acceptance of wind-down agreements, possibly taking their cases to mediation and arbitration or a reversal of a closing.

The other 12 dealers who objected to wind-down offers have sued GM for ending their franchise agreements, in a "high-handed, oppressive and patently unfair" manner, according to their claim statement business card.

In addition to millions of dollars in damages, those dealers are also seeking an injunction prohibiting GM from ending their agreements and a declaration entitling them to remain open for at least another five years. Their current franchises expire in the fall.

GM announced last May that it would close 240 Canadian dealerships to reduce costs and qualify for about $10.6 billion in federal and provincial government aid.

About 85 per cent of the dealers who received nonrenewal notices accepted wind-down agreements and shut down by the end of 2009.

Bob Slessor, one of the dealers suing GM, said he doubts GM will reverse any decisions by the time the company completes its review.

"Even though they go through the process, there are no surprises," said Slessor, who runs a dealership in Grimsby. "A GM vice-president reads from a prepared script."

In the United States, the termination of dealers by GM and Chrysler triggered a backlash that led to legislation last month establishing an arbitration process to determine the fate of many store owners.

The legislation calls for arbitrators to “balance the economic interest of the covered dealership, the economic interest of the covered manufacturer and the economic interest of the public at large” in considering criteria such as the dealer’s profitability and business plan.

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EVERETT, Wash. — Boeing’s new 787 jetliner finally got airborne Tuesday, the long-delayed inaugural flight of the world’s first commercial plane constructed with half its components made from lightweight composite materials.

The jet lifted off from Everett’s Paine Field on a flight over Washington state, beginning an extensive testing program needed to obtain Federal Aviation Administration certification.

The two-member crew performed a variety of basic system checks before landing at Seattle’s Boeing Field about three hours later.

Deteriorating weather brought the plane back about an hour earlier than planned, but company spokeswoman Lori Gunter said the pilots managed to test the landing gear and flaps.

The plane is the first of six 787s Boeing will use in the nine-month flight-test program that will subject the planes to conditions well beyond those found in normal airline service.

Chicago-based Boeing, which has orders for 840 of the jets, plans the first delivery to Japan’s All Nippon Airways late next year.

The 787 is a radical departure in aircraft design. Where other passenger jets are made mostly from aluminum and titanium, about half of the 787 is made of lightweight composite materials such as carbon fiber payday loan lenders.

Those materials have long been used on individual parts such as rudders, and on military planes, but the 787 is the most ambitious use of the technology aboard a passenger plane.

Boeing says the aircraft will be quieter, produce lower emissions and use 20 percent less fuel than comparable planes, while giving passengers a more comfortable cabin with better air quality and larger windows.

Boeing has relied on suppliers to build huge sections of the plane, which are later assembled in Everett. But that approach so far has proved problematic, with ill-fitting parts and other glitches hampering production.

The first flight was supposed to be in 2007. Boeing was forced to push that back five times — delays that have cost the company credibility, sales and billions of dollars.

The version being tested will be able to fly up to 250 passengers about 9,000 miles. A stretch version will be capable of carrying 290 passengers and a short-range model up to 330.

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Hawaii Gov. Linda Lingle on Monday released two lists of judicial nominees given to her by the Judicial Selection Commission to fill one vacancy each on the state Intermediate Court of Appeals and 1st Circuit Court in Honolulu.

The nominees for associate judge of the Intermediate Court of Appeals are Sabrina S. McKenna, 1st Circuit Court judge; Steven M. Nakashima, partner, Marr Jones & Wang; Karen T. Nakasone, deputy public defender in Honolulu; Lawrence M. Reifurth, director of the state Department of Commerce and Consumer Affairs; and Michael K. Tanigawa, adjunct professor, Kapiolani Community College.

The nominees for circuit judge in Honolulu are R saving account pay day loan. Mark Browning, district family court judge; Colette Y. Garibaldi, district judge; Ed Kubo Jr., former U.S. Attorney; Lanson K. Kupau, partner, Kobayashi Sugita & Goda; Steven M. Nakashima, partner, Marr, Jones & Wang; and Dean E. Ochiai, vice president and managing attorney, First Insurance Company of Hawaii.

Lingle has 30 days to make her choice, which still must be confirmed by the state Senate.

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White House economic adviser Lawrence Summers disputed the idea of a “new normal” of slower growth and higher unemployment popularized by Pacific Investment Management Co.

“It will take time, it will take step-by-step a lot of different elements creating jobs,” Summers said at a forum in Washington last night. “But I see no reason why there should be some new normal idea of the potential growth of the country.”

Summers, director of the White House’s National Economic Council, spoke at a conference on innovation and economic growth co-sponsored by Intel Corp. and the Aspen Institute, a non- partisan policy research organization. He was asked about the “new normal” investment analysis in an interview by Judy Woodruff, host of a Bloomberg Television news show and a senior correspondent for PBS’s “The NewsHour with Jim Lehrer.”

Newport Beach, California-based Pimco, which runs the world’s largest bond fund, has forecast what it termed a “new normal” for the global economy that will include heightened government regulation, lower consumption, slower growth and a shrinking role for the U.S. economy.

Summers said that while he anticipates it taking some time for the U.S. economy to recover from the recession, he sees no erosion of the growth potential once an expansion matures amid the right mix of government policies.

“It will take assuring that there are adequate flows of finance, that there is adequate work on the infrastructure of the country, making sure that businesses have the right kind of incentives,” said Summers, who turned 55 yesterday. “There are a lot of things that need to be done. So it will take time to have this expansion mature.”

‘Rebalancing’

Summers also called for a “rebalancing” of the world economy in which U.S. consumers play a less significant role.

“There is no way our import-led growth is going to be the driving force for the rest of the world’s export-led growth going forward,” Summers said.

President Barack Obama and the Democratic congressional majorities in Congress currently face conflicting pressures to stimulate jobs growth and reduce the federal budget deficit. Obama is to host a “jobs summit” with economists, business leaders and union officials on Dec. 3 to discuss ideas for spurring employment.

Summers said attacking unemployment is an essential element in reducing the deficit.

“Putting people back to work, bringing employment back to normal levels, that’s also going to be the single largest factor in bringing down the federal budget deficit,” Summers said.

The unemployment rate rose to 10.2 percent in October, the highest level since 1983.

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Recently a friend was shopping for boots at Saks, only to be told the store was out of her size. "You’re the sixth person I’ve had to turn away," the sales clerk said. My friend is not alone. But at a time of slumping sales, shouldn’t it be easier to find what you want?

Not necessarily. It looks as if some retailers ordering merchandise in the depths of the credit crisis overestimated just how bad things would get. Now certain stores appear at risk of running short of inventory heading into the crucial holiday shopping season.

What does all this mean for consumers? While there will still be plenty of discounts this season, the markdowns probably won’t approach last year’s rock-bottom level. And hot items — like Netpal laptop or Sony’s e-reader — will sell out fast. "You’re not going to see merchandise piled high like you did last year," says Stevan Buxbaum, a consultant.

The cost of inventory is one of the biggest expenses for retailers, and therefore a natural place to cut when sales are falling, as they have been for most of this year. Retailers typically try to order slightly less goods than they expect to sell. It’s a fine balancing act: Not cutting enough results in markdowns to clear unsold goods, while cutting too much risks turning customers away empty handed.

The former scenario played out last Christmas. Caught unprepared by the sharp slowdown in sales following the collapse of Lehman Brothers and other financial institutions, retailers were awash in extra goods. That resulted in lots of great deals for consumers, but those discounts ate into store profits.

This year, the opposite situation appears to be playing out. Retailers were extremely cautious heading into the holiday season, and some may not have ordered enough goods.

During the second quarter, for example, Abercrombie & Fitch’s (ANF) inventory was down 42%, compared with a 28% decline in sales. Ann Taylor (ANN) and Talbots (TLB) both shrank inventory 30% in the period. "These are some of the biggest declines in inventory we have seen since we started tracking the measure in 1992," says Lazard analyst Todd Slater.

These retailers may have miscalculated. Suddenly, the doom and gloom of the past year has been replaced by a slight optimism. Sales at stores open at least a year in September rose for the first time since August 2008. The October figures, due to be released Thursday, are also expected to show strength.

Third quarter GDP grew at a surprisingly strong 3.5%, marking an official end to the Great Recession, although most of that growth was the result of government stimulus programs such as the Car Allowance Rebate System (popularly "Cash for Clunkers). The National Retail Federation predicts holiday sales will decline 1% to $438 billion — less than last year’s 3.4% drop.

Some analysts are predicting an even stronger turnout. Customer Growth Partners, a consulting firm, released a report last week that estimated holiday sales would rise 2.4%, compared with a year ago.

Retailers that try to reorder goods to meet this small but promising uptick in demand may run out of time. For instance, American Eagle Outfitters (AEO) has one of the more nimble supply chains, but it still takes the retailer 45 days to restock merchandise that is made in China. "Many of the companies that I cover have cut inventory too much," says Richard Jaffe, a retail analyst with Stifel Nicolaus. "What do you do Dec. 15 when you’re out of goods?"

Time isn’t the only problem. Dozens of Asian factories have gone bust during the financial crisis, which will restrict supply when demand picks up, says James Lawton, a senior vice president with Dun & Bradstreet, a research and credit-monitoring firm. "A lot of capacity is coming out of the system permanently," he says.

That problem is not just restricted to apparel. Lawton says he knows of one retailer forced to delay store openings because the company that made its shopping carts went bankrupt. "They literally didn’t have enough carts," he says.

The lesson: If you can’t live without those Christian Louboutin booties, you’d better buy them now. 

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Half a million people are now in trial modifications under the Obama administration’s mortgage rescue plan, but getting them permanent help is proving to be difficult.

The foreclosure prevention plan, which reduces eligible borrowers’ monthly payments to no more than 31% of their pre-tax income, requires homeowners to make three on-time monthly payments before they can receive a permanent modification.

Loan servicers use the trial period to verify borrowers’ income and ascertain whether they can handle the reduced payments.

But servicers say they are having a tough time collecting the necessary documents to determine whether troubled borrowers should receive permanent adjustments. They contend that some homeowners aren’t sending in their tax returns, bank statements and pay stubs. Borrowers, on the other hand, complain that their paperwork is being lost.

The Obama administration recently made several changes to the program to give the transactions more time and streamline the plan.

Last month, it extended the trial period by two months to give servicers more time to collect the documents. And last week, it announced that servicers could automatically move qualified borrowers into permanent modifications without their signatures.

The Treasury Department said these moves should make it easier for qualified borrowers to get permanent modifications, according to a spokeswoman. Officials are discussing ways to make it even easier, she said, including allowing servicers to access tax records directly from the Internal Revenue Service.

It is in servicers’ interest to convert eligible borrowers since they only get incentive payments when the modification is made permanent, the Treasury spokeswoman said. Plus, if the government finds institutions to have wrongly deny swaths of people, it could impose penalties.

"Treasury is also working intently with servicers to help ensure that they execute in helping more borrowers convert to permanent modifications," she said.

Who’s to blame?

Servicers say they are wrestling with getting the completed documents they need to put borrowers in permanent modifications.

At JPMorgan Chase, for instance, representatives call and send letters to homeowners detailing what they still need to mail in. The bank says it has improved its system for collecting paperwork so that lost documents are not the problem. The issue, it says, is that homeowners are simply not sending in what’s required.

"At first blush, you’d think that for people who’ve made three payments, it would be a no-brainer to get the paperwork in," said Tom Kelly, a Chase (JPM, Fortune 500) spokesman. "But for some people, it just hasn’t been the case."

A Citigroup (C, Fortune 500) spokesman also said the documentation process has been challenging.

But many borrowers and housing counselors contend that homeowners send in their documents multiple times, only to be told their files are incomplete. This has been a problem that’s plagued the program from the beginning.

On top of that, housing counselors report that banks are sending homeowners forms with the wrong income data listed, which could jeopardize their chances of getting a permanent modification.

One homeowner’s problem

Many borrowers are growing increasingly nervous as they near the end of their trial modification periods with no decision from their servicers.

Jim Copley, a Minneapolis homeowner, was given a trial modification five months ago. He found he could no longer afford his $1,650 monthly payments after the housing collapse decimated his home-painting business.

After receiving a temporary adjustment that cut his payments to $955 a month, Copley sent his servicer, Bank of America, all the required income documentation in June. He was shocked to learn two months later that there was some paperwork missing. He called again and was told that his file was, in fact, complete and that he should continue making reduced payments until he was told otherwise.

"Every time I talk with them, I get a different story," said Copley, a single dad who now makes a third of his previous income selling meat to restaurants. "No matter what I do, I can’t get any kind of an answer."

A Bank of America (BAC, Fortune 500) spokeswoman said that Copley’s file is complete and that he should receive a decision about a permanent modification soon.

It remains to be seen how many people will qualify for permanent modifications.

"If the trial modifications don’t convert to permanent modifications, then the program won’t be considered a success," said Barry Zigas, director of housing policy for the Consumer Federation of America.

Have you turned into a saver because of the recession? How have your saving and spending habits changed? Please email your stories to CNNMoney.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here. 

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American International Group has agreed to sell it’s Taiwan life insurance unit for $2.15 billion, a key step in its effort to raise cash after a U.S. government bailout last year saved the company from collapse.

Primus Financial, a new firm founded by Citigroup’s former investment banking head in Asia and a Chinese partner, has agreed to purchase Nan Shan Life, AIG said on Tuesday, ending a roughly five-month auction that saw several corporate and private equity bidders pursue the division.

With the Nan Shan agreement sealed, AIG is now focused on raising cash from two other major assets in Asia. Hong Kong-based life insurer AIA is seeking a more-than $2 billion initial public offering while American Life Insurance Co, which generates half its revenue in Japan, is seeking a reported $5 billion in an IPO.

Both companies have also attracted acquisition interest, though nothing yet has materialized.

The sale of Nan Shan, in an auction run by Morgan Stanley, allows AIG to check one business off its list of units to sell, after the United States injected $80 billion in taxpayer money into the company after it nearly collapsed late last year.

Primus, run by former Citi executive Robert Morse, and Hong Kong investment group China Strategic Holdings will pay $2.15 billion for AIG’s 97.5 percent stake in Nan Shan, AIG said on Tuesday.

Some analysts and bankers involved in the deal said putting a valuation on the AIG’s Taiwan life insurance unit was difficult instant payday loan no telecheck.

“The pricing is tricky. If you just look at the book value of Nan Shan, then the acquisition price is at a 30 percent discount,” said Pandora Lee, analyst with UBS.

“But for an insurance company, book value is not the only consideration, there are other factors like the people, the products etc,” Lee said. “So its difficult to say at this point if they’ve got a good deal or not.”

Primus and China Strategic will seek loans from Taiwanese banks to finance the deal.

Primus co-chief executive Wing-fai Ng said in an interview with Reuters previously that Primus plans to use Nan Shan as a base to expand to Hong Kong, Malaysia and Japan.

Nan Shan, which has assets of $46.4 billion, has 36,000 sales agents in Taiwan and a market share of 10 percent with its 10 million customers.

The agreement marks the end of an auction that spanned several months and involved multiple bidders, including private equity firms, such as the Carlyle Group. Primus had been competing in the end with Chinatrust Financial.

(Additional reporting by Rachel Lee and Chyen Yee Lee in TAIPEI and Parvathy Ullatil in HONG KONG; Editing by Valerie Lee)

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