American Express pays some cardholders US$300 to close accounts

[peaceandlove]

People who want to pay down their credit cards may benefit from waiting a while, until they pay you, but before some of the interest rates are hiked which is already being reported. Its possible a little bit of negotiating may be in the picture too for pay offs.

Is this an increasing trend?

American Express pays some cardholders US $300 to close accounts

Hugh Son, Bloomberg
Published: Monday, February 23, 2009

American Express is shedding customers as rivals reduce credit lines, raise interest rates and cut back on mail solicitations to brace for future losses.

Article: http://www.financialpost.com/most_popular/story.html?id=1320877

[Steve_A]

Hi peaceandlove,

I have two Amex cards, a gold one and a green charge card (both of which are up to date).

If I received one of those receive money to ditch the card, it could spark off a 'max out the card and throw it away' thought in my mind. :mfr_omg:

It seems that bad credit isn't good any more. Oh that's right, that's how the mess was created in the first place!

I can see a lot of smaller credit card companies (like for shops and stores) go under.

Also with these downed airlines AIG must be under a lot of stress.... but that's another story.

Best regards,

Steve



People who want to pay down their credit cards may benefit from waiting a while, until they pay you, but before some of the interest rates are hiked which is already being reported. Its possible a little bit of negotiating may be in the picture too for pay offs.

Is this a increasing trend?

American Express pays some cardholders US$300 to close accounts

Hugh Son, Bloomberg
Published: Monday, February 23, 2009

American Express is shedding customers as rivals reduce credit lines, raise interest rates and cut back on mail solicitations to brace for future losses.

Article: http://www.financialpost.com/most_popular/story.html?id=1320877

[Steve_A]

Hi peaceandlove,

It seems that my thoughts about AIG were founded, although I'm sure it wasn't only the airline accidents that made them make the following decisions, but I'm sure it was a contributing factor:

Insurance giant AIG facing possible breakup

http://news.yahoo.com/s/ap/20090227/ap_on_bi_ge/aig_bailout

CHARLOTTE, N.C. – Nearly six months after American International Group Inc. got its first massive bailout from the government, it's still stumbling.

The big insurer keeps losing money and is unable to sell some of its biggest assets. Some Wall Street analysts have stopped tracking it. And it appears on the verge of getting another helping hand from Washington.

Like Citigroup Inc., which on Friday received another round of federal support, AIG is considered too big and too important to fail.

"If the government lets AIG fail, I think you are going to see an enormous sort of shock wave across all industries because AIG had their finger in a lot of different areas," said Russell Walker, a risk management professor at Northwestern University in Chicago.

Expectations are that AIG and the government will announce soon, perhaps as early as Monday, their latest plan to prop up the New York-based company. Late Friday, AIG confirmed it will report its fourth-quarter earnings on Monday before the market opens.

The Financial Times, citing people who spoke on condition of anonymity, reported this week that the government will swap the 80 percent stake it currently holds in AIG for even bigger pieces of three units that would be split off from the company: AIG's Asian operations, its international life insurance business and its U.S. personal lines business. A fourth unit made up of AIG's other businesses and troubled assets could be created as well or sold off in pieces, according to the FT report.

In return for the breakup, the government would relax the terms, or cancel, a portion of the $60 billion loan that was at the center of a restructured $150 billion rescue package, the newspaper said.

The company may also need another loan, its fourth, from the government as it is expected to report a $60 billion fourth-quarter loss Monday.

AIG has been forced to seek more help because of a combination of factors including the recession and its falling stock price, now well under $1. Perhaps its biggest problem is the asset sales that were supposed to help the company pay back government loans aren't happening, in part because the credit crisis that initially landed AIG in trouble last summer is also preventing would-be buyers from getting financing.

"If companies actually have cash, or the ability to make a purchase, they are not jumping on AIG right now," said Donn Vickrey, an analyst with Gradient Analytics Inc. "The prudent thing for (companies) to do is just say 'no' at this point unless it's just an insanely cheap price."

That advice doesn't bode well for AIG, which said in October it would sell off business units to repay an original $85 billion loan from the Federal Reserve that it received a month earlier. The loan was reduced to $60 billion in November as part of the larger restructured rescue package totaling $150 billion; it had roughly $38 billion outstanding as of this week.

As of Feb. 13, AIG had already sold interests in nine businesses. But it needs to sell more.

"In ordinary times, the sale of these assets would have been relatively easy," said Bob Hartwig, president of the Insurance Information Institute, a New York-based industry group. "The inability to sell the assets today appears to be more of a function of the inability to finance the deals as opposed to interest in purchasing many of these assets."

According to analysts, AIG has been unable to solicit bids for some of its top units, including American Life Insurance, AIG's U.S. life insurance operation; American International Assurance, Asia's largest life insurer; International Lease Finance Corp., AIG's aircraft leasing subsidiary; and a broker-dealer operation called AIG Advisor Group.

The lack of interest can be seen in the company's stock price. Shares of AIG fell 10 cents, or 19 percent, to 42 cents Friday. Shares are down 96 percent since its first bailout was announced.

Some analysts have given up hope.

"Given the current problems and increased government involvement, it is an unanalyzable company," Stifel Nicolaus & Co. analyst Michael Paisan wrote in a note to investors Tuesday, adding he is ending his coverage of the company. "We have very little confidence in the ability to analyze future earnings."

Last week, Friedman, Billings, Ramsey & Co. analyst Bijan Moazami also dropped coverage of AIG, saying the company's predicament is so uncertain that "analysis of AIG is no longer relevant."

The government steps expected to be announced could put more of a burden on U.S. taxpayers, but the Obama administration may have no other option than to take a bigger interest in the beleaguered insurer.

On Friday, Citigroup agreed to give the government up to a 36 percent stake in the struggling bank, a move intended to strengthen its capital base. Citi has already received $45 billion in cash from the government.

Problems at AIG did not come from its traditional insurance operations, but instead from its financial services units, and primarily its business insuring mortgage-backed securities and other risky debt against default. The government maintains it needed to bail AIG out last September, saying the company's failure would have further disrupt markets and threaten the already fragile economy.

AIG's traditional insurance subsidiaries are widely viewed as safe. If AIG needed to file for bankruptcy protection, "AIG's insurance subsidiaries are separately capitalized and would continue to operate," Hartwig said.

In recent days, AIG has said that it's evaluating "potential new alternatives" to fix its problems. Exactly what those are, the company won't say.

"We continue to work with the U.S. government to evaluate potential new alternatives for addressing AIG's financial challenges," AIG spokeswoman Christina Pretto said Friday. "We will provide a complete update when we report financial results in the near future."

Hartwig said, "we don't know what the form of the deal might be," and added, "obviously there are hot and heavy negotiations going on."




People who want to pay down their credit cards may benefit from waiting a while, until they pay you, but before some of the interest rates are hiked which is already being reported. Its possible a little bit of negotiating may be in the picture too for pay offs.

Is this an increasing trend?

American Express pays some cardholders US$300 to close accounts

Hugh Son, Bloomberg
Published: Monday, February 23, 2009

American Express is shedding customers as rivals reduce credit lines, raise interest rates and cut back on mail solicitations to brace for future losses.

Article: http://www.financialpost.com/most_popular/story.html?id=1320877

[peaceandlove]

Hi Steve,

Yes, it appears your radar is working perfectly.

Here's another newer article regarding credit card companies scrambling.

Card Issuers: How Can We Make You Go Away?

by Kelli B. Grant
Thursday, February 26, 2009

Consumers who carried a big balance and made the bare minimum payment each month used to be a credit-card issuer's dream. Now, they are their worst nightmare.

With defaults on the rise, credit-card issuers are employing all sorts of tactics to persuade consumers to reduce their balances and, ideally, close their accounts. Some issuers are using carrots: American Express is offering some cardholders a $300 gift certificate if they zero out their balance by April 30, and Citibank is offering to match a portion of the payments some cardholders make beyond the minimum amount due. Others are using sticks: Chase is tacking on a $10 monthly fee to the accounts of consumers who have carried a large balance for more than two years.

Article Continues: http://finance.yahoo.com/banking-budgeting/article/106646/Card-Issuers:-How-Can-We-Make-You-Go-Away

[peaceandlove]

Hi Steve,

Here is the newest on AIG including commentary by Karl Denninger at the bottom of this post.

U.S. commits further $30 bln to AIG: sources

Sun Mar 1, 2009 6:55pm EST

By Paritosh Bansal and Lilla Zuill

NEW YORK (Reuters) - The U.S. government will commit another $30 billion to prop up American International Group Inc as the embattled insurer prepares to report the biggest loss in history and struggles to sell assets.

AIG's board on Sunday approved a new rescue package that also includes more lenient terms on an existing government investment in its preferred shares and a lower interest rate on a government credit line, two sources familiar with the matter said.

This would be the third time the government has had to step up to save AIG, once the biggest insurer by market value whose global reach may have made it too big to fail.

Article continues: http://www.reuters.com/article/topNews/idUSN0134457520090301?feedType=RSS&feedName=topNews
OK THIS DOES NOT WANT TO PASTE PROPERLY SO YOU WILL NEED TO COPY AND PASTE THE LINK TO READ THE REST. It keeps leaving a space between the w and the s of News (last word in link).


Commentary by Karl Denninger recent winner of the Accuracy in Media 2009 Grassroots Media Award....see his speech at Project Camelot: http://projectavalon.net/forum/showthread.php?p=117206#post117206 where he also mentions possible insider trading regarding the AIG bailout.


More Lawlessness: AIG

Source: http://market-ticker.org/archives/840-More-Lawlessness-AIG.html

Unbelievable:

"AIG will also give the U.S. Federal Reserve a preferred interest in its American Life Insurance Co (Alico), which generates more than half of its revenue from Japan, and Hong Kong-based life insurance group American International Assurance Co (AIA) in return for reducing its debt, they said."

The Federal Reserve does not have the legal authority to take ownership stakes in anything.

This is what we get for not raising unholy hell when Bear Stearns' "Maiden Lane" was put in place, or when AIG's CDOs and CDS were taken by The Fed.

Now we're rising to open and flagrant flouting of the law.

The Fed, for those who are uninformed, is empowered to loan (under unusual and exigent circumstances) anyone money against collateral.

However, they are not empowered to own anything except debt instruments backed by the full faith and credit of the United States Federal Government.

That they would take an equity stake in a firm based in Hong Kong is beyond outrageous.

Folks, there is no reason whatsoever to believe that our financial system or capital markets will stabilize until "The Bezzle" is forced from our markets.

Make no mistake - it will be forced out.

The only question that remains is whether it will be forced out as a consequence of regulatory action or mass bankruptcy, with unemployment reaching 30% and possibly beyond, 20% of the S&P 500 bankrupt and the SPX trading at 210.

We are headed directly to at least the mid 400s on the S&P and 4,000 on the DOW unless this idiocy is stopped here and now, and I have absolutely no belief that our government has any interest whatsoever in stopping it.

Welcome to the Greater Depression.

[peaceandlove]

No credit card news, so continuing on with the other debacle.

AIG article and commentary by Karl Denninger at bottom:

Bernanke Says Insurer AIG Operated Like a Hedge Fund

By Craig Torres and Hugh Son

March 3 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said American International Group Inc. operated like a hedge fund and having to rescue the insurer made him “more angry” than any other episode during the financial crisis.

“If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG,” Bernanke told lawmakers today. “AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a hedge fund basically that was attached to a large and stable insurance company.”

Bernanke’s comments foreshadow tougher oversight of systemically important financial firms, and come as President Barack Obama seeks legislative proposals within weeks for a regulatory overhaul. The U.S. government has had to deepen its commitment to prevent AIG’s collapse three times since September as the company accumulated the worst losses of any U.S. company.

The company “made huge numbers of irresponsible bets, took huge losses, there was no regulatory oversight because there was a gap in the system,” Bernanke said. At the same time, officials “had no choice but to try and stabilize the system” by aiding the firm.

Article continues: http://www.bloomberg.com/apps/news?pid=20601087&sid=aHx9vZa0IJAo&refer=home



KARL DENNINGER commentary from his blog: http://market-ticker.org/

Bernanke's Lies, Part 4,232,123 (AIG)

How does Congress let Bernanke get away with this?

“If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG,” Bernanke told lawmakers today. “AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a hedge fund basically that was attached to a large and stable insurance company.”

That's true - there was no direct regulation of the financial products "division", and that's something we need to fix.

But what Bernanke didn't say is that he did have the ability to regulate the swap writing and buying as it applied to the creation of systemic risk because he has primary regulatory authority over the banks on the other side of the trades.

That is, while he could not have prohibited AIG from writing the swaps, he absolutely could have prevented the banks from either buying or holding them.

That was within his power and authority - yet he did not exercise that authority.

Of couse you can't sell something for which there is no buyer, and without buyers in the regulated financial system for these "products" there would be no systemic risk.

Bottom line: The Fed created the systemic risk that he claims he now "had to rescue the system from" as a direct consequence of its willful blindness in regards to the banks buying all those CDS from AIG (and elsewhere.)

Once again Ben dissembles and Congress plays the role of the blubbering idiot, unable to ask the tough questions and demand answers.

Yet we wonder why we're here?

[alyscat]

The interesting thing to me is that Citicard, which is citibank (and in really bad shape, apparently) just sent me a new card, because my old one was expiring. Now, I don't have any money on Citicard, they could have chosen to close the account.

I sometimes wonder if the credit cards and the banks have different orgs behind them. I know that I have a significant working realtionship with a Capital One Bank, but the Capital One credit card I have had no way to access that information and made a decision to lower my limit - and when I complained to my bank officer he said the two branches did not talk to one another. Apparently the credit card one only talks to the companies that access credit, like Experian and TansUnion, and those people may not be up to date on what is actually going on in a person's life (they, for example, had an address for me in Charlotte, NC which was almost 10 years old!)

alys

[peaceandlove]

Card Issuers Choke Firms With Rate Hikes, Limit Cuts

By Alexis Leondis

March 17 (Bloomberg) -- Susan Woodward isn’t renewing the lease on her music boutique and internet cafe in Jackson Hole, Wyoming, after nine years. The reason: doubling interest rates on her credit cards.

“My business is seasonal, so we count on credit to stock the store at the end of the slow season and prepare for the busy season,” said Woodward, who canceled her Citibank and Capital One credit cards in February after learning that rates would climb to 19 percent from 10 percent. She said she always made timely payments and kept low balances.

Almost three-quarters of U.S. companies with fewer than 500 employees are experiencing a deterioration in credit or credit- card terms at a time when half of them depend on credit cards as a primary source of financing, according to a December survey of 250 firms by the National Small Business Association, a trade group with more than 150,000 members.

The increase in credit-card costs has forced some business owners to stop using their cards, and at the same time declining credit limits are cutting their access to cash, said Todd McCracken, president of the Washington-based NSBA. Twenty-eight percent of small businesses in NSBA’s December survey said they had their card limits or lines of credit lowered in the second half of 2008.

There were about 27 million companies with fewer than 500 employees in 2007, according to estimates by the Small Business Administration’s Office of Advocacy.

Loans Drying Up...

Article continues: http://www.campaignforliberty.com/wire.php?view=3429

[peaceandlove]

If you have any suspicions at all, I would check your credit card companies frequently to make sure you are not receiving charges for being over your limit, since they have the power to change it at any time without notice.

How to Blow Your Credit Limit -- Without Spending

by Kelli B. Grant
Thursday, March 12, 2009

If you haven't had the credit limit cut on your credit card recently, count yourself lucky. Risk-averse card issuers are getting slash happy. And while many cardholders gripe that such cuts slice razor-close to their balance amounts, for an unfortunate few the cuts go far deeper: below what they currently owe.

Under different circumstances, David Chaplin-Loebell wouldn't have minded that American Express cut his unlimited credit line to just $5,000. Except that when AmEx reduced his line in October, he had an outstanding balance of $10,000. "I found out by having a business purchase declined," he says. Repeated calls to AmEx failed to yield an answer about why the cut was made. Chaplin-Loebell, who lives in Philadelphia, is now paying the balance under his regular card terms, and presumes the line will free up for new purchases once he's below the limit. "For now, they've essentially frozen the account," he says, leaving him to juggle business expenses on his personal cards. American Express did not respond to requests for comment.

Nasty as it may be, the practice of cutting credit lines below the balance is legal -- at least, for now, says Chi Chi Wu, a staff attorney for the National Consumer Law Center, a consumer advocacy group. Federal Reserve rules requiring lenders to give cardholders 45 days notice before reducing a credit line to the point that it would trigger penalties won't go into effect until July 2010. "Until then, there are no federal protections," says Wu.

Article continues: http://finance.yahoo.com/banking-budgeting/article/106716/How-to-Blow-Your-Credit-Limit-Without-Spending