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A lesson in executive logic (greed and sleaze at Chase)

I’ve been thinking about how to explain why Chase is blackmailing certain customers, forcing them by coercion into door number 1, 2, or 3, to the detriment of account holders (and millions of others), and the benefit of Chase (relative to its change in terms, effective January 1, 2009).  It’s quite simple, really, and it all boils down to a lesson in executive logic (greed and sleaze at Chase).

Door Number 1:  In order to avoid an outrageous monthly payment increase, customers (who can), pay Chase off.  Chase raises cash quickly, adds that to the free bail out money ($25 billion), and goes on a shopping spree (Wheeeeee!!!) in two contexts: First, buying out other banks; and second, a personal one, as executives bring home big fat paychecks and acquire whatever it is that one buys with millions of dollars, after executive perks, of course (relatively speaking, as compared to you and me average American citizens, ANYTHING and EVERYTHING): trips, cars, spa treatments, collectables and art, houses (really a good time for that, since they will know which of their customers has concurrently been forced into foreclosure), corporate jets, apertifs before meals, followed by fine wine during- , and cigars with expensive cognac afterwards.  Lobbyists get to join the party, too.  Let the good times roll! (“Hey everybody, let’s rendezvous at the AIG party.”)  

As I mentioned in my post, “How the Chase Card Services Grinch Stole Christmas,” for the first time in my married life, I did not give my wife a Christmas gift, at all, not even a token one.  (And no, don’t even go there!  Read elsewhere on this blog before you comment; my personal debts came from years spent in graduate school to become qualified to teach, trying to help others, not from extravagance, gift giving, cruises, or any kind of splurging.)

Door Number 2:  Customers who can’t pay Chase off (in a lump sum with only a few weeks notice, or on a monthly basis), fall behind.  Chase racks up late fees, over limit fees, and transitions accounts from low “fixed rates” for the “life of the balance” (e.g., 2.99%, 3.99%, 4.99%) to usurious rates (e.g., 29.99%).  At this rate (rounding applies for the following example), a $10,000 account could go from $300, $400, or $500 per year in interest, respectively, to $3000 per year.  Customers are now economically enslaved — trapped by their very own “ServantCard.”  Even if a customer pays a few months at the new rate before falling to his or her knees, Chase increases its quarterly (a.k.a., 10-Q) earnings (and executives get bonuses). 

One observation about the dollar amount example, above: It is, perhaps, substantial for a consumer, but that depends on income (and assets, along with other factors — none of which do credit card companies consider when their “business model” dictates that people who have been paying on time for years are suddenly deemed to be “risky” — another hollow argument for imposing usurious rates).  However, the majority of small business start-ups are “bootstrappers,” and a substantial number of these businesses rely on credit cards as a source of start-up capital on ongoing expenses.  Have you checked the price for a high-end Mac and monitor, with some professional software for video editing and some hard drives for storage, lately?  Yep, about $10,000, and yep, you could start a business and service a clientèle with a set-up like this.  (Too bad, you were duped into thinking you had a few years to pay it off, small — insignificant crawly bug to be squashed by Chase — business owner.)  As it relates to my observation, small businesses are vital to the economy.

Door Number 3: Customers acquiesce and rationalize that they can keep their lower monthly payment and avoid the $10 per month “finance charge” imposed by agreeing to a higher rate, i.e., “maintain their current minimum payments in exchange for giving up their promotional rates [promised, but taken away by coercion]“.  I have seen rates widely on the Internet such as: BEFORE,  3.99%; AFTER, 7.99%.  If you were at a car dealership looking at a mid-priced car, it would look something like this: BEFORE,  $23,785; AFTER, $47,570.  When a company can double its rates, now that’s something executives can truly boast about.  The champaign will flow freely on January 1, 2009 (thus, greedy executives do have a plan: no coincidence that the change in terms notice takes effect on New Years day).  Chase increases its quarterly (10-Q) earnings throughout 2009 (and, executives get bonuses).

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