Gee, a "credit card fix"?
When Bank of America Corp.'s new chief executive takes over next week, one of the first problems he will face is one he's already been grappling withthe bank's credit-card business.
Cards were already the responsibility of incoming CEO Brian Moynihan in his previous job as president of consumer and small-business banking. But the 50-year-old executive had only taken that job in August so had little time to get his hands around the problem.
He did have enough time to realize that mistakes were made and the business had to change. "We gave a lot of cards out to our customers," Mr. Moynihan said in a Nov. 5 speech. "We were giving them to too many people."
What was your first hint Mr. Moynihan? Was it giving credit cards to undocumented aliens by not requiring a social security numbers - accepting "Consular Matricula" forms of "identification", thereby knowing providing banking services for people who are in the country illegally?
Or was it spamming college students with credit cards in the hope that they will become hooked like crack addicts? You know the business model well, right: "The first hit is free!"
Oh wait - that fits the so-called "balance transfer" and "convenience check" policies of years past too, right? Six or twelve months "free" (allegedly anyway), zero interest, but with a catch: if you charged so much as one dollar on that card after the transfer, that new charge would be paid off last and was subject to the full interest rate.
Bank of America was one of the most aggressive with these programs, going so far as to almost accost a depositor who came in to stuff a check in their account via a program they called "Teller Score." Of course the "results" (how many "free hits" were given out by a particular teller) became part of a performance evaluation, didn't it? You'd have to assume "yes."
A Bank of America spokeswoman declined to discuss specific losses from branch card sales and said the problems in the card division were largely the result of a downturn in the U.S. economy and the bank's exposure to troubled spots of the U.S. such as California and Florida.
Uh huh. A downturn in the economy eh? You mean a credit overhang that Bank of America did their damndest to create. After all, pulled-forward demand is great for the economy - for a little while. The hangover sucks however, and when the crack dealer is out of rocks the addict is really in trouble.
The banks all cry poverty about their losses but in fact their losses are self-inflicted. They intentionally played drug dealer and tried to hook as many addicts as they could, but the unfortunate reality of drug addicts is that the drugs are corrosive to their body and mind. Eventually the addict has a heart attack or their teeth rot out of their face, they're unable to eat, and die.
This, in our inestimable wisdom, means that these institutions need a bailout and "government support" (that is, you the prudent pay for their sins) instead of them receiving what a crack dealer receives: 20 years in prison with a cellmate named "Bubba."
Only in America.....
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