Bank of America and Citigroup want to lead the charge (no pun intended) on charging customers who pay off their balances each month and have perfect credit….because they just aren’t making any money off them. This is right up there with increasing taxes in hopes of making more revenue and finding that you just made tax revenue go through the basement. Obviously, there are no true economists that can add using real math instead of red crayon figures at any of these companies.
NEW YORK (CBS) ―Loraine Mullen-Kress carries a Bank of America credit card and religiously pays off her balance.
“Flawless credit,” she boasted.
Yet now, her good credit habits could cost her. Earlier this month Bank of America started notifying customers like Mullen-Kress that they will be charged a new annual fee of $29 to $99.
“There is a big segment of their population that they will have never made money on, which is people who pay their bills on time every month,” said Ben Woolsey, Director of Consumer Research at CreditCards.com.
Bank of America said in a statement: “At this point we’re testing the fee on a very small number of accounts and haven’t made any final decisions.” Citigroup is also trying out an annual fee with some card holders, and analysts expect more banks to follow their lead.
The banks are starting to charge fees to reliable customers in response to a slew of new credit card industry regulations that will limit when banks can hike interest rates. Cardholders who get a new annual fee notice in the mail will be in a no-win situation.
“They can either pay that fee or they can close the account, and if they have had the account for a while and they close it, they are potentially going to hurt their credit card score,” said Woolsey. (emphasis mine)
Have ya coming and going there don’t they? Thanks to Barney Frank and the rest of congress that created this mess with their new credit card rules.
Analysts say right now the banks are trying to figure out what their customers will tolerate. Many say they’d cancel cards with a high new annual fee.
“I think it is really bad. They’re encouraging you to be a bed creditor or not have good credit,” one New Yorker told CBS 2 HD.
Said Mullen-Kress: “An annual fee would not be tolerated.”
Credit card companies call the fees an experiment. Whether they stick depends on whether customers are willing to pay for something that’s been free for so long.
THIS would be the reason why the government should not be allowed to bailout private companies and then tell them what to do, AND the reason we haven’t been able to trust the government and would be fools to continue to do so.
Government regulators threatened to remove top Bank of America executives if they backed out of a buyout of failing brokerage giant Merrill Lynch, and offered to provide taxpayer funds to compensate for Merrill’s poor performance, according to company records obtained by The Washington Times.
The documents – e-mails between bank executives and their outside attorneys as well as board meeting “talking points” prepared for then-Bank of America Chief Executive Ken Lewis – offer new insight into the hardball tactics that produced one of the biggest deals negotiated during the late 2008 global financial crisis, one that is still reverberating on Wall Street and in Washington.
They also underscore the fear shared by then-Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Board Chairman Ben S. Bernanke that allowing the deal to fall through would mean a sequel to the collapse of Lehman Brothers, whose failure months earlier sent the world economy into a tailspin.
“It’s highly unusual for a government agency – let alone a Treasury secretary and a Fed official – to virtually order a company to do something like this under threat of removal,”said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at the Boston University School of Law. “It raises a fascinating question which is, if you’re Bank of America and you have a shareholder’s interests paramount in your mind, what is your liability if you go against those interests in the interests of the country?”
Oct. 21 (Bloomberg) — The Obama administration will order seven companies that received the most government assistance to cut salaries of top executives by 90 percent on average, a person familiar with the situation said.
The Treasury Department’s announcement will come this week, the person said on condition of anonymity. Total compensation, including bonuses and other benefits, for the 25 highest-paid executives must be reduced by about 50 percent, the person said.
So maybe this administration is tryingto destroy the big banks by helping them?
CHICAGO (Reuters) – General Motors Co’s bid to find an outsider to replace its chief financial officer is being complicated by pay restrictions imposed on companies that got big U.S. government bailouts, The Wall Street Journal said on Saturday.
GM executives met recently with U.S. Treasury pay czar Kenneth Feinberg and left with the understanding the automaker would be able to offer a significant amount of stock but no more than a $1 million annual salary, the newspaper said, citing people familiar with the matter.
Sources have told Reuters that GM directors in September backed a plan for CFO Ray Young to leave the company.
GM emerged from bankruptcy in July after receiving $50 billion in emergency U.S. financing.
A spokesman for GM would not comment on whether the CFO search specifically was being hindered by the pay restrictions.
“We’ve consistently said that one challenge to filling any position from outside might be the pay restrictions,” GM spokesman Tom Wilkinson said.
We knew this was coming; the best and the brightest avoiding the government controlled companies for just this reason. I wonder how GM is going to pay us back when they go under for real?
The war to flip this country to socialism continues.
Hank Paulson was a 32 year career Goldman Sachs soldier. He also ran the company as COO and CEO from 1998 through 2006 . . . the exact years that we saw the creation of toxic assets developed by his boys and girls at Goldman Sachs. He left Goldman Sachs at the peak of the bubble to take over the Treasury Secretary job so he could complete the final phase of his scheme . . . cover up, steal a few trillion more, laugh at you and the American public.
Hank Paulson being questioned by Mr. Stearns (FL) about the Bank of America merger with Merrill Lynch. I find the deferred tax issue consistent with the rest of the players now in positions of power, and it is nice to watch Hank squirm even if it is not going to have any real, lasting effect.