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Would Thunderbird School of Global Management’s faculty sensibilities really support the actions of Chase Card Services?

NOTE: I started my work on this post yesterday, and was interrupted by the fact that I needed to embark upon my weekly 300 mile commute (each way), back to my home in Tennessee (we remain imprisoned by virtue of real estate).  Since it is now September 11, I’d like to insert that I hope we are all observing the significance of this day, our fallen heroes, thousands of victims, and millions of irreparably altered American lives. 

Osama bin Laden: May you be a Chase account holder, at the mercy of its customer service representatives, forever. 

I thank “M” for a comment which included a link to a September 9, 2009 press release entitled, “Consumer Groups Call on Chase Bank to End Minimum Payment Hikes on Fixed Rate Credit Cards.”  Along with additional observations, the release included a copy of a letter that was sent to Chase Card Services CEO Gordon Smith, from the consumer groups (Consumers Union, National Consumer Law Center, USPIRG). 

For those of you who do not know, Consumers Union is the nonprofit publisher of Consumer Reports; the National Consumer Law Center is a leading advocacy organization “protecting vulnerable consumers and promoting marketplace justice”; and  USPIRG is a “federation of state Public Interest Research Groups (PIRGs).” 

Rather than quoting the aforementioned letter in its entirety, I’d like to use this present post to make some observations related to selected passages.  First, considering the source (all of these are premier consumer advocacy organizations), I would submit that the conclusion was certainly a rebuke to Mr. Smith’s leadership decisions while at the helm of Chase Card Services:

“By changing the terms of these promotional financial products Chase is significantly harming the economic stability of the families who make up its consumer base. We ask that Chase reconsider this devastating change in terms.”

The letter included two examples.  One was about a customer who used a promotional balance transfer to pay for his daughter’s college tuition.  And the other example was in connection with a small business owner, who “is having a hard time thinking about how he will pay more than twice as much to Chase each month and still turn over a profit to keep his business going” in light of a new monthly payment of $1200, which had previously been $475 per month.

In case it is not obvious, I have long been aggravated about Chase’s willingness to harm families, students, and small businesses with no apparent sense of restraint or remorse: no “opt out” (despite Chase’s portrayals before Congress in testimony that used opt outs to describe the means by which Chase treated customers fairly*).  The fact that it has pursued this course of action while at the same time defaming responsible account holders in the media is really sick and loathsome as well. 

Since most of my personal indebtedness is associated with my decision to return to graduate school at a significant cost, with what I thought was a worthy motive of becoming academically qualified to teach, trying to help people, I am able to easily empathize with students. 

Now, in my present role as an entrepreneurship professor, I feel duty-bound to speak out regarding the “devastating” consequences that have been imposed on Chase customers who used what was promised to be “fixed APR for the life of the balance” loans in connection with small businesses (many of whom are bootstrapping — sorry they’re not glamorous enough for the Chase corporate culture to appreciate, but these entrepreneurs are the lifeblood of our economy and must be nurtured).  (Do not even get me started, Chase, arguing that customers are voluntarily giving up those fixed rates — the choice is nothing more than another underhanded scheme devised to further enrich Chase executives: Door Number 1, 2, or 3.)

Meanwhile, in light of the above (what Chase has done under the authority of Mr. Smith and his executive team) I’d have to point out (again) that this is not an example of leadership.  The reason for my repetition is that this is a brand new semester, with a brand new Master of Entrepreneurship Degree Program cohort, and a course in New Venture Leadership at the undergraduate level to be taught.  (Thus, I have been thinking about the most important objectives that I have in delivering these courses, in keeping with the notion that I want to contribute to the development of individual students, but also to the cause at large of fostering and enabling entrepreneurship.) 

It’s interesting, first impressions are being formed with these students, and in an opening class session I asked them what leadership “is” (broadly, but also in the context of entrepreneurship).  Obviously, whatever leadership is defined to be in the latest bestselling book — usually a rehash of old concepts using new buzzwords — has long been used as a source from which many would derive their answers.  If you are reading this and waiting for a sound bite or my definition, sorry to disappoint, but I think we’re into a very broad subject (which some have studied their entire lives — and I ask my students to do this). 

I don’t mind framing the subject, however, so let’s start by establishing some dimensionality.  Whatever “floats your boat” with respect to terms that may be used, but I believe that there is “good” leadership as well as “bad” leadership.  To some extent, leaders are associated with their ability to amass followers.  With his charismatic public persona and brilliant use of oratory, Adolf Hitler amassed and subsequently perverted a substantial group of followers who committed unspeakable atrocities and acts of evil.  He almost led the entire world down a path to “unity,” by destroying anyone he did not deem fit to exist such that those who remained would be unified.  Hitler was a “bad” leader.  

(I insert today: Osama bin Laden was/is a “bad” leader.)  I think that the leadership at Chase, is “bad,” too; even if the methods of “bad” leaders differ, the lust for domination and callousness in wreaking “devastation” upon others is apparently the same. 

I think “good” leadership requires individuals who hold high ethical standards.  Frankly, there is a whole scholarly area interested in ethics, but I’d like to keep it simple and give some examples demonstrating ethical breeches on the part of Chase.  For one, back when Chase issued its first infamous change in terms notice, that notice stated: “Important: Your APRs will not be impacted by these changes.” 

I’m sorry, Chase, but adding a so-called service charge that “is a finance charge” (ibid, panel 2) does indeed impact APRs, and stating that it doesn’t is not ethical; frankly, since you are in the banking business and know full-well that such actions raise the APR, I am amazed that Chase would expose itself as being so plainly deceptive in its business practices.  I am even more amazed that Chase correspondence, sent to me from its own Executive Offices would be so absurdly and disingenuously written, in light of basic “financial facts of life” regarding the mathmatical result of adding finance charges on top of finance charges, acting as though this had no impact!

Bullying and coercion are not ethical (it is coercive to raise a payment so radically, “devastating” the household budgets of individuals — including students — and families as well as the operating budgets of small business owners).  Portraying one scenario before Congress (referring to opt outs) only to deny customers an opt out is not ethical (and other than the fact that Chase and the banking industry virtually “owns” Congress and the OCC, I think it’s tantamount to perjury).  Portraying responsible account holders who have met all of their obligations as laggards who were not paying enough, soon enough, before the media is not ethical either

Leadership also requires the ability to anticipate the long-term implications of actions that may be taken.  Clearly, attacking a group of “good” customers, alienating them forever, is short-sighted.  With an inkling of positive news in the economy lately, I have recently seen new American Express advertising geared to a small business audience; yet, the imagery of Kevin Johnson and the followers he has on his site,, is what comes to mind first in connection with the AmEx brand.  (Now Kevin is running for office: GO KEVIN!

My kid brother contacted me the other day and informed me that Bank of America radically raised his rate to 27% (Bank of America has now taken over my prior mortgage company, and every time I talk with them they want me to speak with a loan officer about originating a new home loan, once I finally sell my present home).  How many times do I have to say it, incompetent bankers?  You’ve messed around with me, my wife (hence, my immediate family), my brother, friends, neighbors, and my colleagues, students, small business owners (therefore the economic well being of all of us), and the result is that


In short, I think “good” and effective leadership requires at a minimum, an ability to refrain from “harming the economic stability” of not just customers, but of people in general.  Every soul is important.  Harming any person — especially in these difficult times — simply exacerbates an already troubled situation, and that’s what Chase has managed to do (I’ve lost count of the number of people impacted after another wave of change in terms notices — millions) with Gordon Smith at the helm of its Card Services Division.  

I have previously written about the irony of Gordon Smith lecturing at the Thunderbird School of Global Management.  While as he was speaking, minions back at Chase must have been very busy conjuring up and then distributing the first wave of change in terms notices.  The irony was associated with his topic: leadership

I certainly hope that in the future, the administration and faculty at Thunderbird would “consider the source” and recognize that their former guest speaker has overseen “devastating” attacks against consumers on the part of Chase Cards Services while he has served as its CEO (duly noted by some premier consumer advocacy organizations), and therefore he does not seem to be an appropriate choice for delivering a lecture on leadership (or marketing, or anything else that I can think of). 

I’m teaching an MBA class in strategy and marketing this semester as well.  I would not be rude to a guest speaker under any circumstances, but then again, I would not invite Mr. Smith to speak in my class (unless he wanted to apologize on behalf of Chase for “harming the economic stability” of every one of us — not just account holders).

The ultimate irony is that causing such harm to others, also harms Chase.  I’m afraid that’s not leadership either, Mr. Smith.  And, I don’t think I’m going to close this post by asking you to “reconsider” (using such a gentle approach, as did the authors of the letter written by consumer groups).  Rather, Chase’s “leadership” can either retract (further details of this demand can be found here — don’t you just love fine print!) its actions, or suffer all of the consequences that will come as a result of destroying its own brand by cultivating an outright rebellion.  Since what I just said is apparently beyond the intellectual or moral capacity of Chase to grasp, I’ll put it in terms that its executive team should be able to understand (as the tyrant and bully that it has been):

If Chase wants peace, it can issue a press release.

I’ll conclude with what I hope is perceived as a respectful remark in connection with the authors of the press release and letter that has been the subject of my discussion here: Chase is not just harming customers “who make up its consumer base.”  As I have said many times before, when small businesses are harmed, when students are harmed, when individuals and families are harmed, when neighbors, co-workers, brothers and sisters are harmed, then we’re all harmed. 

It does really make me wonder, in light of such a damning letter from these advocacy organizations, would Thunderbird School of Global Management’s faculty sensibilities really support the actions of Chase Card Services? 

* I have previously acknowledged that “fairness” is evidently an outdated concept at Chase, concluding based on its actions that: “Everyone knows the life of our [Chase’s] testimony is about the same as our ‘life of the balance loans’ — until we change our minds and change the terms.”


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