American Express: Anxious to get out from under TARP.

[plditallo]

A few months back I wrote about how I thought American Express intended to map out its future territory regarding its transformation from the financial payments industry to a formal bank holding company under TARP. Based on what I've been reading regarding AMEX and the financial industry in general, I wasn't far off!:-) The more recent strategy developments include repaying the preferred shares and warrant holdings to taxpayers, no doubt, to avoid TARP's restrictions on executive compensation. Many on-air pundits would say that the very fact that holding companies like AMEX, Goldmen Sachs, and Bank of New York/Mellon are willing (and able) to repay on TARP is a welcomed sign of a recovering economy. I say look closer.

AMEX's latest quarterly reports show that its revenues have spiraled down nearly 20% and its earnings by nearly 60%. The official reasons declare pessimism about consumer spending. Although there is some truth to this, it would be wise to recall that last November AMEX did aggressively and systematically purge many of its cardholders with a combination of raising interest rates, reducing credit limits, closing accounts and redlining. In some cases, even offering buyouts for members whom they may want to canvass again later, but don't trust to pay on their accounts today.

In my last post, I promised that I would approach my relationship with AMEX by (1) aggressively reducing the payments on my active accounts from early and generous to just on time and minimal; (2) diverting all merchant charges to other bank cards such as Diners Club; (3) disrupt AMEX's trading partnerships by informing the decision-making branches of those trading partners of AMEX's unfavorable practices which directly resulted in revenue reduction. I can't tell you how delighted I was to see this form of guerrilla consumer advocacy reflected in AMEX's shrinking revenues!;-)

As a consumer and as a taxpayer I am most disturbed at the nonchalance in which the credit card industry treats its role in systemically damaging cardholders' credit ratings by proclaiming arbitrary policies such as redlining to be responsible measures in ferreting out riskier borrowers, when these very same institutions borrowed government bailout funds due to their irresponsibility with other peoples money--namely OURS!