In one sense, this story is already well known, at least by virtue of its observable impact.  We have seen it in neighborhoods across America: foreclosures, short-sales, and a devaluation of property values.  Speculators and house flippers were understandably giddy over profits that seemed at the time, easy and never-ending.  But this period of exuberance did end, badly.  Those of us who are concerned with credit card company abuses, are paying the price.  Taxpayers are paying the price.  Investors from around the world are paying the price.

In essence, the mortgage industry sold “instant gratification” to buyers.  Yes, buyers “signed the dotted line,” and certainly, many knew (or should have known, if they lied about matters such as their income and obligations on “stated income” loan applications — that’s why the slang, “liar’s loans,’ came into being), that they too, were taking a risk.

Everyone was gambling.  But in common, the core belief that drove this scenario was the notion that housing prices would continue to rise.  Refinancing, to take “cash out” of real estate investment gains (or otherwise leverage the cash from appreciation in property values), enabled people to buy even more.  They used that money for anything under the sun: vacations, home improvements, adult toys (and “toy haulers”).

We now know this was a fallacy.  Anyone who may be watching squirrels gathering nuts on the ground for the coming winter can use this as an analogy for what many people did not do.  There are many adages which capture this failing, but perhaps the one (which in history seems to repeat itself) that best captures the miscalculation is this one: “What goes up, must come down.”

The “House of Cards” production does a great job of explaining, how we who are fighting credit card company abuses got where we are today.  Banks bought bad investments.  They want to recoup their losses by dipping into other sources of cash.  First, it was the bail out money: your money, and that of your children and grandchildren.  Second, it is every dollar and quarter, dime, nickel and penny, from fees, interest rate increases, and payment increases that banks can impose on the backs of people who still take pride in trying to pay their bills and fulfilling their obligations.  (But for how long?  Most people who walk away and “leave their keys on the counter” have simply given up, knowing that they can never pay.)

Obviously, the lax regulation that allowed Wall Street to profit and party on what we now know are toxic assets (I’m not an accountant, but it seems to me that a so-called “toxic asset” is a bad debt!) enabled a complex scheme with many participants to arise.

Unfortunately, as banks squeeze those of us who are still standing, more and more “able bodied borrowers,” including small businesses which account for much of our economy, suffocate.  Layoffs and fear have led to the destruction of consumer confidence — so spending slows to a crawl.  Here we are.

I personally found that one of the most interesting interview questions that was posed to various participants in the CNBC piece had to do with “feeling guilty,” for having been a part of this debacle.  The body language told a different story than the words that were uttered, slowly and carefully, in several instances, consistently along the lines of “just part of the food chain.”  Well, I already know where I am in the food chain: near the bottom.  However, when these banks try to “eat” what’s left of the rest of us, I want to make sure that we at least leave a very bad taste in their mouth.

Just a Few More Notes

This present post is very difficult to write.  I am separated from my family by virtue of real estate.  I have a house that has not sold, even though it is well cared for and in a decent middle-class neighborhood.  I have debts that are primarily associated with a decision to go to graduate school, trying to help others by becoming academically qualified to teach.  Those who walk away from their own homes (or who are forced to leave by eviction); those who enabled this to happen (see the documentary for the entire “food chain”); and I, along with my wife and children, are entangled.

Credit card companies (i.e., the banks that run them), are dealing with issues such as losses and liquidity pressures.  Nevertheless, because the banks are equivalent to “Goliath,” and we could be likened to “David,” naturally, ChangeInTerms.com and its supporters are in a position such that if we don’t throw “sticks and stones” to defend ourselves in any way that we can, we will be destroyed.

Sadly, I could be sympathetic to the banks’ problems, if they weren’t so mean and uncaring about what happens to others.  The most typical response to consumers (some of whom are the entrepreneurs we desperately need to nourish for a recovery) when they call to “negotiate,” just as appears to be the case with distressed homeowners, is that banks don’t want to work things out.  Rather, they just want to take everything that they can get, forcibly, mercilessly, and immediately, no matter what the consequences may be for individuals — and when taken in the aggregate — for the economy and this nation’s citizenry as a whole.

This behavior on the part of banks is sure to lead us all down a path to further destruction, I predict, unless we “work things out.”  How do we do that (those of us who are on the receiving end of banks’ callous, greedy, untenable dispositions)?  That’s really quite simple.  Anyone who has survived a schoolyard bully knows that the only way to prevail, is to make him or her very afraid of you.  If you are a small person, then you may need to assemble an army and gang-up on that bully.

I actually have a post in draft mode on the subject of “somebody should do it.”  Here’s what it boils down to: all of us “little people” must band together (this is a tiny example, but I sometimes get frustrated: why have I written several times, trying to get someone to print-out a free protest T-shirt, and send me a picture for the site?  Scared; too busy; afraid to raise a “stink” in public — I can understand all of these, because they describe me, but I still fight).

The formula for returning to a period of economic stability is also fairly simple.  Banks are in the business of taking in deposits, and lending at a profit.  Profits are a function of “time and terms.”  If they wanted to do it, they could institute all kinds of creative workarounds, because that’s what ends up happening in settlements.  Why they don’t want to work with people until the situation becomes such that a settlement is for “pennies on the dollar” (with the losses being shifted to those who are still standing, financially), is hard to fathom.  I suppose it’s because enough people have not has yet boycotted media for running credit card companies’ ads; written to affinity partners; threatened the reelection prospects of representatives; or gone “viral,” like the Debtor’s Revolt video.

If you aren’t willing to combine forces and join the fight, then you can count on being fleeced, beaten, and terrorized by such a bully.  We have already seen that this bully’s greed is insatiable.  I guess you’ll get involved once you’ve “lost your backpack and lunch money,” one too many times.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | One comment | Add to del.icio.us
Post tags: "Bail Out", banks, consumers, credit, credit cards, debt, economy, fees, interest, interest rate, regulation, small business

Feed enhanced by Better Feed from Ozh

I set out this morning trying to research “Mafia loan-sharking rates,” but my inquiry was frustrated a bit when I entered that term in search engines.  Many of the hits that were returned pertained to credit card companies and their rates, which clearly, people associate with Mafia rates.  But I wanted to know specifically about the Mafia rates.  Since I am not a criminal, I really wasn’t certain.

Among my findings, I came across a Google books preview of The Complete Idiot’s Guide to the Mafia.  In a section entitled, “Bringing in the Loan Sharks,” I found the following information:

“Mafia guys love loan sharking….Loan sharks make tremendous amounts of money….Most loan sharks charge customers anywhere from two to five points a week in interest on the unpaid balance of the loan.  For example, if a customer borrowed $1,000 on a Friday at five points a week, the following Friday a would pay a $50 ‘vig’ to keep the cash another week or pay it off with a $1050 payment….Small loans, say $100, are usually six payment affairs in which a customer makes weekly payments of $20 to satisfy a $100 loan.  Some loan sharks take $4 at the front end….His average rates are about 150 percent a year.”  (p. 138).

With regard to the “$4 at the front end” in passage above, that’s an interesting coincidence as it relates to balance transfer fees.  Most of the promotional balance transfer offers I see are typically three percent, no maximum; however, Bank of America’s are now four percent of the amount borrowed.  You will note that $4 on a $100 loan is four percent, so it appears that Bank of America’s up-front fee is possibly modeled after that of some loan sharks.

I also found another site, which provided a transcript of testimony from Michael DiLeonardo in the case, United States of America v. John A. Gotti, Jr., defendant (scroll down to the section, “Earning Money With the Mob”):

“Q. Why were you stronger with the Gambino family behind you?

A. I had a whole enterprise behind me, a whole army. It’s like having a license.

Q. What kind of money did you start to earn on the street?

A. I got $10,000 from Paulie Zac to go out and start shylocking, which I did.

Q. What do you mean by shylocking?

A. Well, I was able to go out and lend money out at an interest rate, a weekly interest rate.

Q. What kind of interest rate?

A. I charged up to 5 percent, from 3 to 5 percent at that time.

Q. And that’s 5 percent a week?

A. 5 percent weekly, yes.

Q. If someone pays that weekly percentage, does it do anything to affect the principal?

A. No, never.”

The aforementioned site also has a fabulous bibliography (developed over a long period of time by Thomas P. Hunt, who is evidently an excellent researcher and subject matter expert on Mafia activities).

As I discussed when I was in Washington, a question exists, at what point do we consider interest rates to be too high?

Even though I have to acknowledge that banks are not actually charging as much as the Mafia (with the exception of some up-front balance transfer fees, like those of B of A), thirty percent or more is certainly prohibitive to the average consumer: students, middle class Americans, people in your neighborhood (would you like your home’s value to drop even more, because a neighbor is in financial distress for any reason, not just a mortgage?).

Thirty percent is also high enough to destroy all hope of repayment on the part of most borrowers, so they default and pass on their debt to those of us who are still paying (I know, some holier than thou individuals exist, and will be simpletons in their “solution”: just “pay cash”).  If we want an economic recovery, these rates must come down so that entrepreneurs can get back to work, too (and part of their work is creating jobs).

Meanwhile, thirty percent is certainly a slap in the face of taxpayers, who have bailed out the banks (especially given a FED funds rate of one quarter of a percent; “The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight”).

Now, with Chase, it “offered” some customers an “alternative“: If customers couldn’t stomach the increase in payments, then they could alleviate the pain of higher payments simply by switching to a rate that was (typically) double the previously promised promotional rate.  For example, a customer (aren’t they considered victims by the Mafia?) could agree to go from 3.99 percent to 7.99 percent (and the 7.99 percent was for a limited duration).

Of course, exactly what rate constitutes “loan-sharking” is a subject that deserves more discussion.  However, it’s not strictly about the interest rate.  Rather, we’re back to the notion of good faith versus bad faith, and intent.  Is it a loan, or is it a purposely set trap, designed to ensure a victim’s exploitation until death?  To my last point, I think that the Mafia and credit card companies use tactics that are exactly alike: “We’re gonna hurt you or your loved ones, and we’re gonna enjoy it.”

In keeping with the above, I’ve come up with a new slogan when you communicate with banks’ Congressional representatives:

CAP INTEREST RATES, NOT OUR KNEES

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | No comment | Add to del.icio.us
Post tags: banks, credit, debt, fees, interest, interest rate, Testimony

Feed enhanced by Better Feed from Ozh

Apparently, her video, “DEBTORS REVOLT BEGINS NOW!,” is drawing a lot of attention on the Internet.  According to Mr. Delaney, the video (released on September 8, 2009) had received “96,000 views as of Monday morning [September 14]“; in checking just now, the site reports 175,023 views (it was 151,204 yesterday, when I started composing this post!):

Click here to view the embedded video.

Not surprisingly, with that kind of trajectory in viewership, comments have also been robust.  Many are supportive, and many are not.  Since I have this blog as a platform, obviously, this post is my primary place for adding my own “comment.”

First of all, I personally have not taken the same approach in refusing to pay (actually, her refusal appears to be “unless she was offered a lower rate,” which was raised to 30 percent as of July).  I do think 30% is obscene (in the questioning period after my testimony before Congress I remarked along the lines of “how high did interest rates need to go before everyone agreed that it was legalized loan-sharking…40%, higher?”).

I do understand that such a refusal as has been pursued by Ms. Minch may appear to be the “biggest stick” that an individual borrower may have if he or she feels that it is impossible to negotiate any other way in the face of interest rate or minimum payment hikes.  I am not a lawyer, so I can’t really advise someone one way or another in taking such an approach.  However, I can say that generally, “it depends” (on the value of one’s assets, his or her credit rating or concern for that rating, and other circumstances).

Notwithstanding the above, relative to her premise — starting a revolution — I agree that fighting back is necessary.  (Respectfully, she claims that hers is “the proverbial first shot fired in an American debtors’ revolution,” but she is not the first — consumer advocates and others have been fighting this battle for years.)  Nevertheless, how or even if one chooses to fight back is matter of heated debate (judging by comments under her videos).

The ChangeInTerms.com site has predominantly featured Chase since I began actively blogging here, but as you will note, “the cause” is ending the abusive treatment of customers by the credit card industry at large, and I have long been against that abusiveness.  I think that fighting back is best approached using well researched information, along with technologies to disseminate anti-marketing messages (obviously, a viral video is one such technology, regardless of how one feels about the negotiation tactic that Ms. Minch has decided to employ).

In reading some of the negative comments, I found myself saddened.  Numerous remarks were personal attacks against this individual, accusing her of buying cosmetics, or whatever (the point was, according to the comments, that she borrowed money frivolously and she shouldn’t have done that — time to pay the price).

What made me sad was that it’s hard for me to stomach some of the negative comments underneath a video like this.  Many people seem to assume that anyone in debt has gotten in that position because they were frivolous, or stupid (“read your contract”).  These individuals who make such assumptions about “read your contract” completely ignore, however, other tenets under the law, especially “bad faith” versus “good faith.”

The contracts written by credit card companies are bad faith agreements, which seems to be alright with anyone who is able to “pay cash.”  What is interesting to me, is that many of these holier than though individuals passing judgment would “holler to high heaven,” if they were on the receiving end of a bad faith contract themselves.  What are other “bad faith” contract examples?

How about the nightmare stories concerning home improvements (when jobs go bad, or are not completed)?  Let those “paid cash for my home” buyers get into one of those bad faith deals, and they’d scream, too.  The mechanic “said” your transmission was rebuilt, but a minor repair was made, instead (because that was all that was really needed: again, “bad faith”).

I could go on and on…but if “screwing the other person over is fine, as long as you don’t do do it to me” is the mentality out there, what a merciless, horrible future, we face.  Our unsuspecting children will have it even worse, and eventually they will learn to lie, cheat, steal, and otherwise be “out to get the other person, before he or she gets me.”  What a vicious downward spiral.

I would venture to guess that 99% of the “read your contract” folks slept through the part about the necessity for good faith that underpins all contractual agreements in whatever business law class they may have taken (if they took one at all).  For that matter, the “rule of law” itself means nothing, to individuals or a citizenry at large in the situation under which laws apply, when the intent of parties is to willfully act in bad faith.

What really frustrates me, is questioning my own life in the face of such mean-spirited, presumptuous, holier than thou “don’t spend what you don’t have” remarks.  It’s not my video, but I (too) spent money “I did not have.”  I get the feeling that these critical individuals who are passing judgment, would not care that I did so going to graduate school, so that I could be academically qualified to teach.  I wanted to try to help people, and I have.  Thus, I question myself: “But at what cost?”

The comments from those who “do have” (apparently some have a whole lot — they even think that beyond credit cards, people should have no debt, not even a mortgage — must be fabulous, buying houses for cash) really hurt.  Some were laden with expletives and made me feel like anyone who is in debt, for any reason, is scorned.  They really are merciless, barbaric, Roman Emperor “thumbs down” callous; many are not even civil to one another.  If comments like that come to this blog, I do not want them.  We can all disagree, but I’m not interested in a brawl.

Did I make a mistake, going to graduate school?  Well, it was certainly a financial mistake.  Did I make a mistake, thinking I could make a difference by teaching?  I don’t think so.  Not every student is going to like every professor, or learn, but most seem to learn from what I provide in the classroom (or on my faculty site, et cetera).  Am I sorry I borrowed money to go to graduate school?  Absolutely, yes.

Could I have gone to graduate school without borrowing money?  I would have been too old to teach, if I waited and saved enough to “pay cash.”

Would I live my life differently, if I had it to do over again?  I would not change some things:

I’m far from perfect, and I’ve certainly made mistakes, but I’ve always done the best I could;

I pay my bills on time and meet my obligations;

I’m a good citizen: I pay my taxes, although I’m very concerned that government is spending “our money” on the wrong things at the wrong time, and at levels that are beyond all of our means (for example, see my previous article, “A low cost ‘2-3-4′ assumable step-loan program would have prevented much of what has ailed us and what will be ailing us for decades“);

I earn an honest living: I don’t wake up each morning trying to think of ways to screw people over (like many credit card companies do); instead, I try to help them;

I am a hard worker;

I take pride in maintaining my home and I take care of what I do have;

I was a very good student, in graduate school;

I have been completely faithful to my wife (I do tell “wife jokes” on occasion…but wives, including mine, tell “husband jokes,” too); I love my wife and my children;

I am a person of faith (but I do not believe that is my right to judge others in their faith, or any lack thereof);

I accept other people (and their individual and cultural perspectives — indeed, I love learning about these);

When I am gone I will leave what I hope will be pleasant “memories” for some whose paths in life have crossed my own;

My writings, art, and photographs (as forms of expression) may be seen as a contribution, by somebody.

Meanwhile, the other thing that really hurts is the selfishness and ignorance suggested by some comments under the aforementioned video.  When I say “ignorance,” I mean the inability to think (apparently) about the interconnectedness of it all, beyond individuals, consumers and what they buy using credit cards.

This is not strictly a consumer or consumption issue.  It’s a lot of interrelated concerns that are at stake here: “fairness,” whatever that is ultimately defined to be (in consideration of usury), being the biggest one.   Political processes and corruption (credit card industry lobbyists having more influence that “we the people” — millions upon millions of credit card holders) is also a major issue.  This is especially exacerbated with the media too afraid to engage in real journalism because of the threat of lost ad revenues, so they make these things a “last page” mention (or ignore them).  (I have not seen one hard hard-hitting story about the Congressional testimony delivered by Chase executives who used opt outs to describe the means by which customers were treated fairly, yet Chase turned right around and refused to provide an opt out with its infamous 5% — payment-jacking — change in terms.)

I am also referring to issues related to the economy, which is especially in need of nurturing small businesses (the vast majority of which are started by entrepreneurial “bootstrapping,” and may very likely entail using HELOCs, credit cards, and/or other non-traditional sources of capital).

Importantly, bootstrapping, including using credit cards to start businesses has been done successfully.  I would offer Google as a bootstrapping start-up example, a company that has gone on to generate wealth and employment for thousands.

Now, I am not saying that start-ups should use credit cards; rather, I am merely pointing out that they do use credit cards.  And they do so in very large numbers.  Sometimes it works, and sometimes it doesn’t, but entrepreneurs are typically passionate people who are driven to try (there are so many obstacles, they need to be).  Furthermore, without the successful efforts of some who do make it, civilization as we know it would not exist (if you’re reading this on a computer, thank many entrepreneurs who each played a part in bringing that computer to market).

And yes, I acknowledge that it would be nice to “save up” and “pay cash” to start a business (buy a house or a car, or go to graduate school).  Unfortunately, in many instances, it would be too late; i.e., with entrepreneurship, it can be the case that an opportunity or market that isn’t seized promptly, is lost permanently.

Despite this present post, or all of the ChangeInTerms.com site’s content, there apparently will always be comments by dismissive, naive, selfish individuals who either cannot or will not grasp the issues.  Have I make a mistake, fighting the abusive treatment of customers by credit card companies (again, I have asked myself)?  I’ve outlined who I am and what I believe in, and I don’t think so.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 13 comments | Add to del.icio.us
Post tags: "Bail Out", consumers, credit, credit cards, debt, interest, interest rate, small business, Testimony

Feed enhanced by Better Feed from Ozh

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, NewCreditRules.com, 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

NOW I’M COMING AFTER YOU!  

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.”

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | No comment | Add to del.icio.us
Post tags: advocacy, change in terms, consumers, credit, credit cards, customer service, debt, economy, interest, notices, small business, Testimony

Feed enhanced by Better Feed from Ozh

“I would print out flyers and leave them outside a chase bank near me, but am afraid of hidden cameras. do they have any recourse?” 

The updated flyer arose after “FightChase” contacted me and sent a copy of his original version (one that he was passing out to Chase Bank branch managers while protesting in front of their respective branches with a sign), and I worked to make some improvements.  Subsequent suggestions for even further improvements have been made (I don’t mind making revisions, but, I actually think it would be nice to have tons of people creating their own version of flyers as a form of self-expression and revolt). 

Meanwhile, I responded to Steve with some remarks about hidden cameras, but I also suggested that it’s probably going to be more effective to distribute the flyers to “everyone on the planet,” besides Chase (or at least in addition to, Chase).  I then indicated that I would create a list of ways to distribute flyers (without having to hand them to someone face-to-face).  I’ll start the list, and call upon site visitors to add other suggestions.  (I frankly am engaged in this fight because I think that what Chase is doing is flat-out unconscionable, so be open-minded about who may be concerned or in a position to influence others; it is essential to leverage the fact that one person might transmit the message to another, and another — you get the idea.)

You must see this situation much like the science fiction movies, “War of the Worlds“  or “Independence Day.”  Chase has the powerful weapons and intends to conquer and (economically enslave) the planet, and the only weapon we have is a virus.  In this situation, Chase’s “powerful weapons” are the media influence it exercises as a result of its tremendous ad spending capacity, and the fact that it manipulates the legal environment (with lobbying or “do-gooder projects,” while sweeping the stories about its victims under a rug).  Thus, we have to spread the word on the Internet, and via old fashioned word-of-mouth (also related to the term, “viral marketing”). 

Perfect example: Chase is spending heavily in The Orange County Register, and which newspaper seems to be ignoring this issue?

As I have been writing, a hit song from Paul Simon has been playing in my head, “50 Ways to Leave Your Lover” (I’d like to end up with a list of 50 ways to distribute flyers, thereby encouraging consumers to “Leave Their Chase Banker”).  So here’s a start:

Post on public bulletin boards (e.g., in grocery stores, on college campuses);

When mailing your payments for ordinary bills (such as a power bill), stuff one in the envelope (if you think it is processed by a human being);

After dining in a restaurant, leave one on the table (or better yet, if there’s a newspaper sitting around, place it inside – that way the flyer will probably circulate more widely);

If you take public transit, leave one in places where you (or other passengers) sit, wait, or ride;

A variation for “public transit,” in airports, leave them in waiting areas (an if you are flying, stick one inside the free air traveler magazines in the seat pocket in front of you);

Leave one in a public rest room (the way Chase acts — and gets away with it because it practically “owns the law and the media” reminds me of vulgar graffiti, anyway);

Send a flyer to any of Chase’s affinity partners (those with branded cards, with Chase, for instance);

Send a flyer to every bank or credit union in your town, other than Chase;

If you are visiting a doctor’s office, your dentist, etc., leave one in the waiting room (again, following the logic above about inserting flyers in newspapers, you may want to place it inside a magazine);

Send them to legislators (maybe with a respectful note: “Either you work to stop this abuse, or you will lose my vote for reelection”);

Leave one in a shopping cart (people will often opt for a cart with nothing in it, so the flyer will just sit in a cart — but the headline might grab some attention);

Send the flyer to any CPA (bookkeeper, accountant);

Send the flyer to individuals who provide financial planning or similar advice;

Some libraries and public buildings have places to post flyers;

If you identify “opinion leaders,” make sure they have a flyer;

If you are an alum from a university that happens to have partnered with Chase in selling credit cards, send one to your alumni association president, university president, and board members (they probably will care, if the relationship might lead to bad PR);

Send them to mortgage lenders (may be a long shot for people to refinance homes, but Chase has certainly given a reason to do so, if that is an option);

Okay, like I said, the above was a start; you all can keep going.  Please comment with more “creative ways” to spread the flyer, and our message to Chase:

NOW WE’RE STILL COMING AFTER YOU

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 3 comments | Add to del.icio.us
Post tags: consumers, credit

Feed enhanced by Better Feed from Ozh

At the time, my wife and I thought that since everything was packed, and our ultimate destination was North Carolina, anyway, then we should go ahead and move it.  (Usually there is little or no moving allowance by the way; it’s Penske trucks — and a massive DIY packing project when we have moved — ever since I began my second career in academia.)

Over the phone (although we had seen the property on a house-hunting trip when we were under the impression that our home sale would close), we leased a 3-bedroom, 2-bath condo.  Our thinking was that we would live there (in the condo), and visit the house in Tennessee until it sold.

We keep an extremely clean and well maintained home (I was without a home, i.e., homeless, at one point in my adult life, so I am very obsessive-compulsive about taking care of what we do have), and our real estate agent expressed confidence in the property’s prospects for selling again soon (during the fall 2008).  The condo manager was kind, and even negotiated an “out” clause in our agreement, in the event that we did sell.

We left just enough things in the Tennessee home to get by: the guest bedroom bed, a scaled down but working kitchen, a few chairs, a small (old-style) TV (we don’t own one of those fancy, newfangled flat-screen TVs), some folding chairs and folding tables, and just a few pieces of furniture in the great room.  The kids’ rooms were emptied completely.  The washer and dryer were moved.  Most clothes, linens, and anything such as personal effects, photographs and memorabilia: they were packed and moved.

After my first week of new employee orientation, we all got in the car and headed back to Tennessee, from the condo in North Carolina.  When we arrived in the early hours of the morning (about 1:00 a.m. on a Saturday, having left on a Friday night), we found our door unlocked.  Yep, a real estate agent had shown the home and failed to lock the door properly.

I could fill up a whole new blog expressing my sentiments and experiences with real estate agents, if I only had the time (noting that blog is short for web log, which originally suggested an online diary).  I’ll skip that for now, because I want to simply point out why we came to the immediate conclusion that someone had to stay in Tennessee, to baby-sit the house.

This was because irresponsible, unprofessional, incompetent realtors (spell-check wants me to capitalize here, but I refuse to do so), don’t give a second thought about sellers’ properties (all they work for is commissions, those so-called buyer’s agents are not in a position to be either “free” or objective when they earn their living by taking their “cut” off the top of every transaction).  They act like your property is their property, to show (calling from a cell phone in your driveway), but they sure as heck don’t bother to extend any respect otherwise.

Since my job was in North Carolina, my wife and kids were the ones to stay with the house for sale.

“Should we bring stuff back?,” we wondered to ourselves.

“No, we’ll wait it out — the house will sell again, soon,” we said; our agent said.

In the meantime, my wife and kids lived as though they were “camping out,” inside of a suburban home.  People have suffered worse; I have suffered worse (as I said, I was once without a home for a period of time).  But, things were not working out as we expected.  I commuted.

My university office was in transition, because the College of Business building was being renovated.  I was advised not to unpack, there.  I had no intention of unpacking most of what had been moved to the condo, either.  Everywhere, most of what we had was either “nothingness” (in Tennessee) or packed and stacked.

As a teacher, I have always enjoyed bringing in exhibits to support what I may have to discuss on any given topic; these resources were packed.  As a researcher, my books and files: packed.  I was not getting “settled in” at work.

As the fall semester was winding up, we were debating where to spend Christmas.  We had signed with a new real estate listing agent (our third), and among the assurances given in the agreement was one that stated that the home would be secured after any showing.  We ended up spending Christmas day in North Carolina, but as can be learned from reading my How Chase Card Service Stole Christmas eBook, that day was destroyed.

The new spring 2009 semester soon began.  My dear cousin was diagnosed with pancreatic cancer; my wife was scheduled for major surgery in February.  Chase had threatened everything I had worked for, for years.  Chase jeopardized my family.  Chase cornered me, although I had done nothing wrong, and evidently, hundreds of thousands of other families and small businesses.

I have been fighting my own personal battles for a long time: to acquire a formal education as an adult learner at the undergraduate level (finally, at the age of 28, I earned that first degree); as an employee in various industries; as an entrepreneur (who has both failed and succeeded); as a husband and father; and in recent years as an academically employed individual.

It’s true.  I have incurred and carried a significant debt load.  However, my debts are primarily associated with my decision to return to graduate school, with the aspiration of becoming qualified to teach; my desire was and is to try to help and serve others.  I had been paying down my debts.  I had been meeting my obligations (I am still doing both, but I am referring to where I stood as I began the spring 2008 semester), and Chase, had decided to attack its most loyal customers.

The spring semester marched on:

My wife had surgery, and recovered (stranded for six weeks with food at arm’s reach on a folding table) in a near-empty house, primarily under the care of children;

Our third real estate agent resigned earlier than the contract specified (she did not have the professionalism to do so in person; she sent emails and subsequently an administrative assistant to have us sign off on the termination — good riddance!);

My dear cousin died;

Chase sent its letter stating that it had “incorrectly” included my account in its infamous “5% minimum payment; ’service charge’ that ‘is a finance charge’,” change in terms;

(But) by then, my personal financial matters became public information, as I felt the only way to fight was to be willing to talk to the media, and use this blog to communicate my disdain for the abusive practices of credit card companies at large against consumers and small businesses;

By May, our house was on the market without a real estate agent (during this period, we observed some of the most unethical treatment of all);

By June, I gave notice at the North Carolina condo — I was moving (almost) everything back to Tennessee.  If we had to look forward to an indefinite period, during which we were still trying to sell, at least my wife and kids could live like normal people in our home;

During the month of June and July, I moved.  A lot of hard physical labor has been involved (my wife has recovered but she is in no condition to be doing “heavy lifting”);

A few weeks ago, in mid-July, the ChangeInTerms.com site went down.  The host suggested that it may have been attacked because a “malicious” hacker file was found in one of the folders;

Concurrently, Chase has mercilessly attacked hundreds of thousands more account holders, hurting consumers, small businesses, and all those who might be considered collateral damage – employees, families;

My emails have piled up;

One of my emails, from someone who knows me and about my advocacy and concern for entrepreneurs, states: “Just as you feared…..Here’s a small, growing business about to be put out of business by Chase’s change in terms.  These folks did what a lot of us did – used Chase credit cards to finance their business”;

My home is now put back together, and habitable (as of several days ago);

Long overdue personal matters have been serviced (tires, dental exams, and the like);

I don’t know where I will be living this coming semester, but I think it will be in hotels (at least I can come home more often, not worrying about our personal things being left in North Carolina);

Here is where I stand, now:

I think I have managed to restore the site, with the exception of the missing posts and comments since June 22, 2009.  I am very disappointed with the hosting situation — that’s a long story.  To make it short, data centers are often attacked, or there can be other naturally occurring issues that arise.  That’s what backups are for, and the reason the site is up again at all is because it was restored from a backup, except for the missing data which for some mysterious reason simply is not in that database – I have looked (at the actual database).

Meanwhile, the company that does the hosting is engaged in a transition, and is moving its customer base to new servers held under a different company name.  I can’t predict the future relative to that transition and the consequences that may arise.

I do not want to complain.  However, it seems that I have no choice but to state a lament: I have said I do not want donations because it sends the wrong message (the long version is elsewhere on the site).  Yet, it remains the case that help is needed in support of this cause in other ways.

I am not a programmer.  I have a career and a lot of responsibilities (and also a very challenging personal situation with a home that has not sold in Tennessee, while at the same time my job is in North Carolina, as detailed above, perhaps ad nauseam).

I have received a number of emails expressing concern that the site was down altogether or not functioning properly.  These tell me that I am not alone in my concern over the issues between credit card companies and their abusive treatment of consumers and small businesses.

That being said, I have felt very much alone in the technology support arena, and it has been up to me to “fix” these problems.

I’ll do the best I can.

No reader should interpret the above to suggest that at some point, frustrated with technology, I would throw in the towel relative to the larger cause.  The site is a tool in the fight, but not the only one.  When you are on a journey and the vehicle breaks down, then you get out and continue on by other means.

You push.  You pull.  You walk.  Or you crawl.

I am on a journey, and I sometimes get to travel fast, and at other times progress is slow.  It can be the case that everything comes to a standstill, or we lose ground and go backwards.  If you are with me, against the abusive treatment of consumers and small businesses by credit card companies, then rest assured that I will continue fighting.

As long as we are right and the leaders of credit card companies are wrong, they will never win the race.  Faith is mightier than fear, and with the former you shall prevail over all obstacles.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 6 comments | Add to del.icio.us
Post tags: advocacy, change in terms, consumers, credit, credit cards, debt, small business

Feed enhanced by Better Feed from Ozh

We were always ready to show with an immaculate and well cared for home, “staged” and with all of the right fragrances, a shine on the appliances, and cleanliness otherwise, inside, under, outside.  We also cut the price: again, and again, and again, and again, trying to be competitive with the market.  Nevertheless, I have been working in North Carolina during the past academic year, and my family has been back in Tennessee.  My wife and I are “separated,” except by virtue of real estate, rather than by marital woes or choice.

The separation and commuting back and forth have been a little taste of hell.  This may also explain — as I have been paying “double” on housing costs during this period of time — why it is that when Chase sent its change in terms notice, it did make me “sick to my stomach” (Brian quoting me, and now me quoting him).

My father was a fighter pilot, and his being called away for military service while I was a child is something I still remember well.  Our situation (that of my wife, children, and myself) has not been that bad, since I’m not being shot at.  But it has certainly been challenging, nonetheless.  I thank those who are serving and protecting us in the military, now.

The aforementioned surgery was timed to coincide with a spring break the following week, and thanks to colleagues at Western Carolina University who have been extremely kind to me, I made some arrangements to fill in for an advising day and one of my classes during the week of the surgery itself.

After spring break was over, I backed out of my driveway in Tennessee, with my wife left essentially in the care of our two children.  I had pulled down everything we could think of from cabinets and closets so that food, towels, blankets, cooking utensils, toilet paper, and other necessities for their survival, camp-out-style, could be reached.  It’s not as though I was the one who had the surgery, but I felt terrible, leaving.

Brian impressed me greatly, not just as a journalist, but as a human being.  We spoke and emailed several times, and he regularly inquired about my wife’s recovery.  The first time we talked, he was immediately warm and conversationally generous — coming across as the kind of person I’d enjoy having as a guest at a back-yard Bar-B-Que (I love cooking, but my wife says I brag too much when I’m in the kitchen; nevertheless, I invited her for dinner for our first date over two decades ago, so you decide!).  Brian is also intellectually vibrant, and I enjoyed our talks.

Brian had nominated me as a candidate for one of the photos to be included in his article, which I now know is entitled, “About That New, ‘Friendly’ Consumer Contract” (April 30, 2009, online; May 11, 2009, print). At the time, I did not understand that the decision would be made elsewhere by editors, so I was scrambling for a tie and accessories, which I did not have with me in Tennessee when Brian was conducting his initial interview.

I tell you all of this to give you context.  I’ve been praised on this site for fighting Chase, and the abuses of credit card companies in general.  However, I’m just a regular person who like many others before me, is working hard to take care of my family, and trying to do right by others (such as students and credit card holders who are either consumers or small business owners).  At the risk of employing an old cliché, I put my pants on one leg at a time, just like anybody else.

I was generally very pleased with the article.  If it’s not clear by this point in my post, Brian Grow was very “decent” towards me and I appreciated the way he treated me during the interview process.  He’s a good guy.

I had hoped for a little less “about me” and a little more about the small business issue.  That being said, if the article directs traffic to the ChangeInTerms.com site, at least visitors may realize that my advocacy is “not so much” about me or any of the personal trials and tribulations that my family and I have faced (we consider ourselves very fortunate, in fact — my wife is much better at this point), but about the issue of abusive treatment of customers by credit card companies.

As can be ascertained from Brian’s article (page 3 of the Internet version), after several sickening months Chase did back down relative to my particular account.  Yet, I have not backed down, and I do not intend to do so, unless and until Chase issues a press release, and admits that it made a mistake relative to all account holders.

Brian was nice, when he stated that “abrupt changes have turned into a public-relations challenge for Chase.”  However, let’s be more direct.  “Chase didn’t admit any wrongdoing” (ibid).  That’s typical, but  the New York Attorney General flatly said that “Truth-in-lending laws prohibit this very conduct.”  Chase apparently even tried to infer that because “there were ‘no negotiations’ with Cuomo’s office,” that it was not engaged in wrongdoing.  I’d like to see this smokescreen cleared by suggesting that the most likely reason that there were no negotiations is because Chase was in violation of Truth-in-Lending-Laws.

I wanted to be a pilot like my dad; indeed, as a boy I dreamed of traveling even farther, in the space program (eyeglasses intervened).  Things don’t always turn out like what you may have imagined, hoped for, or planned.  But here’s what I do know now, credit card companies: with little or no provocation, you have attacked my former colleague, my wife, my former neighbor (an entrepreneur), me (and therefore my whole family), and millions of other undeserving account holders — consumers and small businesses.  Your lack of restraint is unprecedented, especially after taking bail out money and during a volatile time when we are all struggling in a weakened economy.  And we’re now banding together.

My dad used to quip the old pilot’s joke that “any landing you walk away from is a good one” (humor aside, I can understand that point of view; earlier jets were notoriously dangerous).  Well, abusive credit card companies (especially you, Chase): we’re going to “shoot you and your fancy corporate jets down” with anti-marketing missiles, alternative financing sources, lawsuits, and regulation that you royally deserve to receive after what you have perpetrated with such ruthlessness.  These actions against customers, orchestrated by scheming executives, whose only moral code is apparently unbridled greed, will end.

The next time you “kick me when I’m down,” you’d better make sure I’m dead.  I’ve been very “friendly,” thus far, and so have the vast majority of other account holders.  We’ve been paying our bills and meeting our obligations no matter what we have individually and severally been confronting in our own respective lives.  Therefore, abusive credit card companies, you’d better straighten up and fly right.

I recently celebrated another birthday (alone; I’ll be home soon for my cake, dear), and I’m old enough to not want a fight, but still young enough to declare to abusive credit card companies:

NOW I’M (STILL) COMING AFTER YOU

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 15 comments | Add to del.icio.us
Post tags: "Bail Out", advocacy, banks, change in terms, consumers, credit, economy, regulation, small business

Feed enhanced by Better Feed from Ozh

A representative from Chase Executive offices just called me about my email to Gordon Smith. Their position is that the statements made to Congress about Chase having an opt out program for those who do not agree with changes to their terms is outdated. They state that 2 changes have occurred since that testimony and therefore Carter Franke’s assurances do not carry forward to our claims as they were promised on a different type of account and different circumstances.

Of course, I find this twisted logic by Chase very interesting.  It does elicit a number of points that merit cross-examination.  Let’s start with a review of the testimony, the dates, the time-line, and the context.

In his capacity as Chase’s Chief Marketing Officer, Carter Franke provided testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs on January 25, 2007.  In that testimony, a discussion about “opt outs” was used to illustrate the means by which Chase worked with account holders and treated customers fairly.  With respect to context, preceding the remarks about opt outs, Franke stated:

“We appreciate our customers, and we believe our success is based on maintaining a good relationship with every one of them.”

I note that the word-choice “every” does not distinguish differences in account types.  Obviously, one of the aforementioned “2 changes” is that Chase has determined that it is not interested in maintaining a “good relationship” with 400,000 account holders who were meeting their obligations.  Rather, it has chosen to alienate those customers not only by virtue of changing “fixed APR Until the balance is paid in full” loan terms, it also decided to defame those customers through disseminating a negative portrayal of affected account holders in the media.

Franke also stated:

“Our objective is to establish long-term relationships with students so they will continue to do business with us all their lives.”

I mention this because as I have explained elsewhere, with some obvious exceptions such as my mortgage and a vehicle loan, my personal credit obligations are primarily associated with my decision to go to graduate school, so as to become academically qualified to teach.  I wanted to serve and help others.

As I gradually claw my way out of debt as a result of pursuing what I considered to be a long-term and worthy objective (as compared to “shopping” or some other frivolous behavior), I would observe that Chase has failed miserably in meeting its stated objective relative to maintaining a life-long relationship with me, speaking as a former student.  As an entrepreneurship professor, now, I am responsible for interweaving a message of ethical behavior in all of my courses (the Chase behavior certainly makes for a great “textbook case study“).  Further, you can “bet your sweet bippy!” that I also warn students about the dangers of using credit cards both as consumers, and as a source of capital for small businesses.

Franke also stated:

The importance of customer relationships is a key driver of many of our business decisions. For example, a missed payment on a non-Chase card does not result in an automatic re-pricing of any Chase account.

Obviously, this is another one of the “2 changes” mentioned in Cathy’s comment, above.  Clearly, customer relationships are no longer a “key driver” in Chase’s business decisions (if it ever was in the first place, recalling that well before the date of the testimony, a Chase supervisor expressed no interest whatsoever in maintaining a relationship with my wife, after Chase took an adverse action against her “for no reason”).  I also have not seen any evidence that Chase isn’t re-pricing cards based on any excuse it can conjure up (and further, according to some posts I have seen on the Internet, it is apparently pulling other “stunts” such as manipulating billing statement due dates so as to “help” people miss a payment).

Now, as for the “opt out” passage, Franke stated:

“We deal with them [customers] fairly and responsibly….we provide that customer with an “opt out” option.  This means that the customer may reject any change in terms, close their account, and pay off the balance under their existing terms.  We believe the vast majority of our customers feel they are being treated fairly.”

On March 7, 2007, Richard Srednicki (the former CEO of Chase Card Services until he was replaced by Gordon Smith), delivered very similar testimony before the U.S. Senate Permanent Subcommittee on Investigations.  About 10 months passed in 2007, and 11 months passed in 2008 before Chase imposed its change in terms to the contrary.

Hence, the life expectancy of Chase executives’ assurances appears to be under two years.  Regular readers of the ChangeInTerms.com site will also recall that coincidentally, Chase “desired” to be paid back in about two years (something it never bothered to tell customers when it was promoting its “life of the balance” loans).

In light of the new ”spin” in the Chase Executive Office’s position as noted in Cathy’s comment (also demonstrating that Chase has no moral compass), the statement that “We deal with them fairly and responsibly” reflects yet another change.  Accordingly, new testimony, if it was delivered honestly (apparently not among the list of needed leadership competencies to be a Chase executive), would state:

We previously claimed to deal with customers (but we meant only some account types) fairly and responsibly when we sat with a straight-faced and lied before Congress, but a key driver in our business decisions is now short-term profits for our executive perks and bonuses.  We also want to raise capital for buying the distressed assets of other banks (like Wa Mu) by accepting bail out money and squeezing customers.

That old “fairness” thing?  It’s really been discarded as a useless anchor holding us back at Chase — totally outdated.  No more opt outs.  We bully the customers and give them no choice in the matter whatsoever.  Everyone knows the life of our testimony is about the same as our “life of the balance loans” — until we change our minds and change the terms.

Would you like to know what else has also changed?  Carter Franke’s testimony also stated:

This is an extremely competitive industry, and customers have many attractive credit card offers to choose from.

Have you noticed that the industry is for all intents and purposes no longer competitive?  Rather, it is run more like a cartel (humm, gas prices in my area: $1.99, $1.99, $1.98; balance transfer fee: 3% no maximum, 3% no maximum, 4% no maximum — new for B of A)?

No, you really don’t have an “opt out” choice with Chase — “fairness” is dead.  And, you are really going to be pushed around, trapped like a surrounded victim in a circle of muggers.  Lacking any other “attractive credit card offers to choose from,” recently, you can now count on being assaulted by group of lying executives and their lobbyists who control an unfettered credit card industry where the “largest 12 issuers…control more than 88 percent of all outstanding credit card debt in America.”

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 15 comments | Add to del.icio.us
Post tags: "Bail Out", banks, change in terms, consumers, credit, credit cards, debt, economy, interest, small business, Testimony

Feed enhanced by Better Feed from Ozh

Unfortunately, the form does not provide a means for linking, or text effects such as italics, but that’s a very minor point; passing these protections is vital, so please visit the site and submit your own comments, today.  The text below is what I submitted (feel free to copy and paste into the aforementioned form, if you wish):

In recent weeks, several of the major banks and credit card companies raised interest rates and fees yet again. The media reported Capital One hiked interest rates to 17.9 percent from 12.9 percent. Citibank raised their rates an average of 3 percent.

Over at Chase, customers had a “choice” of paying a $120-a-year fee (which was actually a “finance charge” that changed a previously promised promotional rate) and a coercive higher minimum payment (5% of the balance), or paying a higher interest rate.

Worse, given that Chase executives previously testified before Congress about playing “fairly” by providing “opt outs,” guess what was missing?  If you guessed that the “opt out” was no where to be found in Chase’s change in terms notice, then you are correct — there was no “opt out.”  Doesn’t Congress take testimony seriously enough to hold these executives accountable for misleading our elected representatives with what can only be taken as an outright lie by the 400,000 account holders who received Chase’s notice of such onerous new terms (obviously designed to force customers into other choices, such as doubling their interest rates)?

I don’t understand why interest rates for consumers are so high, when the interest rate banks charge each other for overnight loans is as low as 0 percent.

As a responsible credit card consumer, I shouldn’t be subjected to unexpected interest rate increases and fees, which only drive up my costs during these tough economic times. The Federal Reserve Board recently agreed to new credit card reforms which would curb many of these abuses, but those rules will not go into effect until July 2010.  Further, Chase wanted 18 months to comply with these new rules, yet it argued that customers should only need 15 days to comply with its new rules.  Why not protect consumers from these one-sided and completely unfair credit card issuers RIGHT NOW!

The bills being considered would go even further than the rules to help consumers, such as limiting the duration of penalty fees which can sap consumers’ wallets, and curbing aggressive credit card marketing to teenagers without an ability to pay. The bills would:

– Prevent my card company from changing the rules of the game midstream. Companies shouldn’t be allowed to arbitrarily hike the interest rate on my existing balance or new transactions if I make my payments on time just because of an “anytime/any reason” clause in the contract. The deal I signed up for should be the deal I get.

– Require card companies apply my payments fairly across my different balances, not just to the lowest-interest balance. That’s just common sense.

– Control the size and duration of penalty interest rates. Companies shouldn’t be able to keep me at usurious interest rates forever only for one late payment or another minor infraction.

– End abrupt reductions in my credit limit, which negatively affects my credit score through no fault of my own.

–  Provide an adequate amount of time to pay my bill on time by requiring my bill be sent out no later than 21 days from the due date.

– Prevent fees just to pay my bill online or on the phone.

– End aggressive marketing of credit cards to young people who need a chance to establish themselves without a heavy debt burden.

Let’s not forget that small businesses frequently use credit cards.  According to a Federal Reserve Report (2007, showing 2003 data), almost half (46.7%) of small firms used personal credit cards!

ChangeInTerms.com has published a “Credit Cards and Small Business Usage Report,” which provides additional information about the impact of credit card company abuses on entrepreneurs.  Given that an economic recovery will not be possible without a healthy entrepreneurial environment, it is extremely important that you support these needed reforms. 

Indeed, while they are generally long-overdue, under our present circumstances it is vital that you act to stop the next meltdown that the banking industry’s reckless “strong-arm” tactics with consumers and small business owners will actually create, this time over “plastic.”  Don’t let those who have exhibited a clear pattern of failed leadership relative to the banking industry’s numerous misjudgments, unethical behavior, and greed, lead us all down a path of financial destruction in yet another context. 

If these banking industry executives were honest and competent in the first place, we would not all be where we are today, in a crisis that spiraled out of control at a tremendous cost, which will be shouldered for generations.  Please stop listening to their spin, lies and rhetoric, and listen to US (ordinary consumers and entrepreneurs on “main street”) for a change.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 5 comments | Add to del.icio.us
Post tags: advocacy, banks, change in terms, consumers, credit, credit cards, debt, fees, interest, interest rate, small business, Testimony

Feed enhanced by Better Feed from Ozh

I appreciate the advocacy of Illinois State Treasurer Giannoulias.  Quoting from the aforementioned article:

On many college campuses it is normal to see a number of credit card vendors competing for students’ business.
 
However, Illinois State Treasurer Alexi Giannoulias is looking to put a stop to this scenario, which he has described as predatory.
 
This week he has been on the University of Illinois campus holding what is called a “counter-marketing” event in which students are asked to sign a petition in support of responsible credit card marketing.

In my particular case, being at mid-career when I started graduate school, I already had established credit, and the maturity to manage credit obligations.  I have tried to utilize long-term supposedly “fixed rate” offers, along with traditional U.S. Department of Education loans (now “consolidated” — these are disbursed incrementally as one progresses through his or her courses). 

Meanwhile, I am certainly for “responsible credit card marketing.”  Unfortunately, the very definition of marketing includes pricing, and as long as one is playing Russian roulette relative to how credit card companies will change terms (i.e., pricing relative to fees and rates), there is no such thing as “responsible” relative to the credit card industry.  I am therefore gratified to see this example of backlash (counter-marketing) taking place at the University of Illinois, or on any college campus. 

For those who are familiar with the core messages associated with the ChangeInTerms.com site, I have long held that while we can’t really change any terms from a legal perspective (initial contracts are written entirely in favor of credit card companies, by virtue of “any time, for any reason, including no reason” change provisions), we can change the terms from a consumer perspective.  In other words, through “counter-marketing” (and I would argue that this is actually more potent and faster-acting than the law), put up a fight!  We can let credit card companies know that we’re no longer willing to tolerate present abuses, and in the long-run, they are making mistakes by alienating a customer base that is going to strike back.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | No comment | Add to del.icio.us
Post tags: advocacy, credit, credit cards, debt, fees, interest

Feed enhanced by Better Feed from Ozh