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Gearing up for new FED Rules — “is not going to be easy.”

In a comment from Barbara, she quoted the following statement attributed to Peter Garuccio, a spokesman for the American Bankers Association (ABA), originally taken from an article in the Washington Independent entitled, “Congress Delays Credit Card Reform“:

“The changes will require card issuers to reprogram computers, retrain call-center employees, verify the legality of the new policies and rework marketing strategies.”

Now, as for the difficulty in gearing up to abide by the new FED rules, I thought I might take a few moments to compose an analysis of the “not going to be easy” gripe (also from Garuccio of the ABA); I admit “just a touch” of sarcasm may follow.

Reprogramming computers: They probably have a lot to do.  After all, creating a system that: automatically generates a late fee with split-second precision (“Oops, it’s 5 o’clock p.m. plus 1/100th of a second: you’re LATE — gotcha!”); sends a letter informing the customer of a new usurious rate; reports a late payment notice to credit bureaus (triggering universal default and therefore notifying other members of the cartel — credit card industry — to also impose new sky-high rates); and, places a flag on the call-center operator’s computer screen (“we got ’em, whack ’em, rub it in, gloat”), has taken a while for the credit card issuers to create.  We can’t expect to dismantle a system like this easily — so many interlocking pieces.

Retrain call-center employees: Well, since a piece of my doctoral program was devoted to training and development, I think I can handle this one.  First of all, even though my academic studies involved human adult learners and learning organizations, I would mention training dogs to get us off on the right foot, and keep it simple.  Commands such as “roll over, sit, speak” are usually followed with a reward.

With human beings, we generally recognize intrinsic rewards, and extrinsic rewards.  The former are often associated with a sense of personal satisfaction (internal to the person), while the latter are typically associated with some type of observable (external) reward, typically recognition, praise, or monetary compensation.  People tend to be motivated by a combination of both.

Quoting from a “Post From An Anonymous Chase Manhattan Bank Employee” (as seen on, here is what appears to be an explanation of the current reward system at Chase:

The reason the bankers at Chase are so pushy, and recommend specific things are because we make what are called “Personal Value Credits” or PVC’s. That is our commission.  We open a checking account: 5 PVCs, we sell a Debit Rewards card: 7 PVCs.  Credit cards: 17.5 PVCs.  Loans and investments pay the most.  Loans are 0.7 PVCs for every $1000, so a $100,000 loan = 70PVCs.   This is why customer service is horrible… there is a tremendous amount of pressure for each banker to make at least 1150 PVCs. That is 100% payout….Chase Bank will do anything, at any cost to acquire their business… Ethical or unethical.  It isn’t the banker’s fault.  We have our jobs threatened unless we push the products they say, when they say.  If we don’t food is taken off of our tables, and we can’t earn commission.

By the way, the opposite of a reward is punishment.  Obviously, if your whole culture is devoted to abusing customers and creating a system of servitude for account holders and employees alike, it will take some time to fix this.  I would suggest replacing the executives with people who have leadership competencies (which include ethics).

Verify the legality of the new policies: Yeah, it will be a real hardship, and time consuming, to implement policies once banks are no longer able to answer any and every customer complaint with a quip such as, “It’s all perfectly legal, and we can do anything we want to you, any time we want, any way we want [as long as we give you 45 days notice that you are going to be bludgeoned — we used to be able to “have our way with you” with only 15 days notice…tears of sorrow].”  I would suggest replacing the executives with people who have leadership competencies (which include ethics).

Rework marketing strategies: Many people think of marketing as promotion, sales, or advertising.  However, marketing starts with the identification of basic needs and wants (desires) of customers.  Since prior to entering academia I spent much of my career in marketing and service oriented roles, let me shorten the new product development cycle for the banks, dramatically.  Here’s what we want:

  • A price we can depend on;
  • A product performance that lives up to the promises that are made;
  • A customer service experience that is based on we (banks) “want ya!” and your business, as compared to we “gotcha!” and you can take it, and take it, and take it (abuses, that is, especially with no “opt out,” like the one Chase executives described in testimony before Congress, and then failed to provide);
  • “Fixed APR Until the balance is paid in full” loans that we pay back without a surprise later on like the one Chase imposed (with no “opt out”) because it “desired” repayment in two years, or “on demand,” or at double the originally promoted interest rate;
  • Fees based on whether we, as consumers, actually did something wrong (as compared to banks trying to “make us late” by changing due dates, shredding payments, delaying the posting of payments, or blaming us instead of the postal service when we tried in good faith to send a payment on time);
  • Treatment that does not include defaming us in the media;
  • A monthly payment amount that we can budget for, depend on, and live with (instead of being subjected to a coercive payment-jacking scheme such as raising the minimum payment by a factor of two-and-one-half times the previously imposed minimum payment, which is what Chase did when it changed the minimum from 2% of the balance to 5% of the balance);
  • We want to be able to mutually agree to terms, and any subsequent changes in terms instead of banks being able to use “any time, any reason, or no reason” clauses as a catch-all phrase which serves as a license to engage in loan-sharking and extortion;
  • We want to have the ability to settle disputes fairly, noting that a forced arbitration trap exists wherein cases are almost never decided in favor of consumers (you can sue us, and we should be able to do the same to you);
  • No “over-the-limit” fees for transactions that you, credit card issuers, approve or deny in the first place;
  • Credit lines that are dependable (no lowering of these credit lines with no notice, just to then turn around impose an over-the-limit fee);
  • To be treated fairly and ethically;
  • Credit card products that are safe to use;
  • A reasonable penalty system.  For example, if someone has paid on time for several years, and then happens to be two or three days late (or an hour late), have a little respect and do not rate-jack that person;
  • To not loathe you (as most of us presently who have been mistreated and abused do);

On second thought, relative to shortening the product development cycle, I guess the list of consumer “needs and wants” above may take some time to address, given that they are the antithesis of the credit card industry’s current business model.  Organizational cultures have arisen over a period of decades that will be extremely difficult to change.  But, I do have a solution to this apparent conundrum:

I would suggest replacing the executives with people who have leadership competencies (which include ethics).