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People's United Financial Inc. Message Board

  • salochasnyk salochasnyk Aug 1, 2000 2:25 PM Flag

    With all these gloomy posts, why isn't

    the stock price going below 19? Please sell, get
    rid of this garbage that cheats the cardholders and
    provides terrible service. I'm trying to buy at 18.75 for
    the lousy dividend that keeps on growing every half

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    • As said by George W. Morriss (Executive VP &
      Chief Financial Officer), PBCT asserts that it can
      "raise the rate as we see fit."

      This is
      essentially what every credit card issuer says, so let's not
      single out People's Bank as behaving unusually. The
      lender is the sole determinant of your creditworthiness,
      whether or not you are granted credit, in what amount,
      and at what rate. The deal is in fact an
      individualized contract between the lender and each card holder,
      even though it appears otherwise through marketing
      with advertisements, brochures, and such. Moreover the
      deal can be modified ongoing, including conditions and
      rates, because the contract includes a provision for
      such changes to occur. Show me the law that restricts
      the above -- I'll bet you can't. Because
      notwithstanding TILA, FCBA, FCRA and FDCPA (which pertain to
      notification and transactional "rules of engagement" for
      lending) the government has historically taken a "hands
      off" approach to what can go into the actual credit
      agreement. Their view is that "fees and charges are
      legitimate business decisions of the banks, which should be
      subject to economic and competitive forces and not
      arbitrarily set by statute." After all, the credit agreement
      is an "arms-length" transaction that both parties
      willing enter into, there is plenty of competition within
      the marketplace, and if a lender's offered terms seem
      unacceptable there are many others from which to choose.
      Interest rates are therefore assumed to be fairly priced
      based on market conditions without the necessity for
      government interference.

      Key phrases that most likely
      appeared on the application you signed to obtain credit

      "You agree to the terms of the [Credit Agreement], as
      it may be amended from time to time, when you obtain
      credit or authorize others to obtain credit under the

      "[The card's] fixed APR is subject to change from time
      to time but only after prior notice to

      That leaves things pretty much wide open. The deal can
      change at the drop of a hat, theoretically. And when it
      does, you will receive a notice as it may be required
      by law. Then you either accept the changes, try to
      negotiate for better terms, or move on to another lender.
      Crying foul may help you to vent your frustation, but
      you already accept these rules of the game as
      embodied in these 2 key sentences when you signed up. It
      may seem harsh, but remember the presumption is that
      the market conditions drive towards fairness in terms
      and rates. Welcome to the "Laissez Faire" approach to

    • Obviously their answer to you specifically is
      they don't feel they made an error in assessing your
      account as one that is riskier. So the line has been
      drawn in the sand.

      One item I'm wondering about
      though is who has the burden of proof in showing
      creditworthiness. From PBCT's viewpoint you had an apparent blemish
      on your credit history, with the whole US Bancorp /
      TransUnion mixup. When you were persuing damages against
      TransUnion (although I know you actually settled before
      going to trial) it would have been based in part on the
      notion that they inflicted harm to your reputation that
      would ultimately cause your access to credit to be
      repriced, restricted or denied by others based on their
      faulty reporting. So where you stand now should not be a
      surprise, because it would have been part of your arguments
      against TransUnion. OK, now you've gotten a settlement.
      Do you mean to tell me these erroneous facts are
      still appearing on your credit report, even after the
      settlement took effect? And if they are, did you present a
      copy of the legal papers you have from your settlement
      to the bank so that they can know the truth about
      that incident? Because otherwise, the suggestion that
      they should re-verify credit report information before
      taking an action on any apparently risky account would
      place a huge burden back onto the creditor. Your case
      seems like the exception, not the norm. Generally
      speaking, without hard evidence, the bank is going to
      believe the credit report. And while YOU may feel the
      credit reporting industry is fundamentally flawed and
      unreliable, the bank's reliance upon this information would
      be considered a usual and customary practice within
      the lending industry.

      Their response to your
      complaint letter was pretty vague though in saying the rate
      increase was "based not only on how you have managed your
      credit with us, but also on how you have managed your
      credit with others." This seems to me like boiler-plate
      language, which rather deliberately avoids naming the
      specific items which made them classify your account as a
      risk. Which leaves it pretty much wide open when you go
      head-to-head. Other than the specific incident you mentioned,
      they could certainly hang the "risky" moniker on ANY
      late payment or even just having a high outstanding
      balance somewhere. Probably by now they want to make it
      stick just because they don't like how you've been
      calling them names!

    • For those who have said "my credit history did
      not change, so they have no right to flip/flop in
      their assessment of my account as risky" ... here is
      something more to consider as you ponder the issue and how
      to react. There is typically a phrase in most credit
      card agreements like the following one:

      "We can
      delay in enforcing or fail to enforce any of our rights
      under this agreement without losing them."

      is one of the ways your claim of unfair treatment
      could be deflected. And it can indeed be based upon a
      reasonable stance. While they might theoretically have had a
      report available from an agency (such as TransUnion)
      that does not mean they actually had the time & energy
      to process all of that information yet. Or they may
      have developed new methods to process and analyze the
      information which were not ready for use before. What appears
      to you to be inconsistent handling (because you are
      focused soley on your own report) could in fact be
      delayed action resulting from a lag in reacting to a
      great amount of incoming data for a large customer
      base. Another possibility is that action could be
      delayed to coordinate handling of similarly situated
      accounts at or around the same time, for economies of
      scale in preparing account adjustments and mailings.
      Yet another possibility is that changing conditions
      in business and the economy required a re-evaluation
      of the bank's exposure to risk overall, and what was
      within a given tolerance before might now seem riskier
      as a result of this new information about the
      overall lending market.

    • I don't think anyone is arguing the bank can't
      change rates to keep up with market forces.

      doesn't seem to be the issue in our case. certainly the
      market pressures didn't suddenly go up by 13%. and,
      since they didn't provide the 15 day TILA-required
      notice, they're out of luck on that

      where they are in trouble with us is:

      a) the
      contract says they can raise interest rates only when we
      don't pay > them < on time, or exceed credit
      limit. neither apply to us. if they didn't like the USB
      info on our credit report, the only option they had
      according to the contract, citing this as a reason, was to
      > close < our account.

      b) the
      notification letter was undated, un-postmarked, and arrived
      three days after the effective date of the rate change.
      the burden of proof therefore will be on them, if
      they want to excercise the 'delinquent/default' clause
      (which they haven't specifically), to show they mailed
      the notice > before < the effective date. I say
      they didn't, and I see no way they can prove they did
      (undated letters/notices are EXTREMELY sloppy and
      unprofessional, and judges hate them (and often limit their use
      as evidence).

    • key. if you have clearly walked away from a
      number of other credit obligations, and/or declared
      bankruptcy, a creditor probably has the right to consider you
      in default and take actions to protect themselves.
      this kind of language is in the PBCT agreement.
      however, this does have to be tempered with common sense.
      if someone has a couple of 'late' payments (still
      paid within 30 days), that is not a sign of a
      defaulter. shit happens. many people occassionally get into
      a situation where they don't or can't get a payment
      in to someone before the deadline. if the creditor
      involved doesn't make an issue of the situation, why
      should a third party? and something like this is clearly
      > not < a serious delinquincy.

      given the poor state of affairs of the credit reporting
      world (we have already had our go-round with
      TransUnion), a third party would be prudent to check whether
      the information they were acting on was accurate and
      legitimate > before < taking action.

      we have a
      USB 'discharge' on our credit report (it has been
      there for more than 2 years). this stems from a
      msi-appropriation of funds action against the bank (we prevailed),
      and subsequent ongoing FCBA/FCRA actions against
      them. there is no 'default' or 'delinquincy': we
      exercised a legitimate right of set-off against an account
      while the matter was in the courts. the account was
      subsequently 'frozen' when USB engaged in activities in
      violation of FCBA and FCRA. PBCT could have asked about the
      issue at any time, and received an explanation. they
      raised our credit limit three times during the period
      that this item first appeared on our credit report.
      doesn't sound like they were too concerned about our
      creditworthiness in the recent past, so why now?

    • The link I gave before in post #483 shows that
      what we are seeing now with PBCT (examining your
      payment history with respect to other companies, not just
      the bank itself, to determine overall risk) is not a
      new approach. Citibank / AT&T Universal, Capital One,
      etc., have used this approach for quite some time.
      Household Bank has it too in their agreement (I've checked
      it personally) -- you will be considered in default
      if they receive information from third parties which
      indicates a "serious delinqeuncy" with OTHER creditors. Got
      a card from someone else? Keep reading the fine
      print in your own credit card agreements. There are
      bound to be a lot more banks that have language of this
      sort embedded within their contracts.

      I believe
      I mentioned this early on (in post #335) but nobody
      seemed to believe it could be true.

      As far as
      whether or not it is specifically called out in the PBCT
      credit card agreements, we would really have to have the
      full text before us to know for sure, rather than
      hearing someone else's interpretation. First-person
      knowledge is a supremely powerful force in determining a
      complete, accurate and truthful assessment of the facts.
      However, keep in mind that even if it's not a part of the
      "default" clause, it is surely allowable to increase rates
      under the broader "change of terms" clause (see post
      #463), and as long as adequate TILA notice is given the
      bank can set the new rate for an indivdiual account as
      it sees fit. Historically the government at the
      state & federal level presumes that competitive forces
      within the market will steer creditors to set rates to a
      level that is reasonable for that person's unique
      circumstances, and therefore does not place restrictions on how
      the rate is set.

    • Maybe it would be safer to wait for $ 12 ? If
      even a fraction of these complaints are legitimate,
      and the actions claimed are carried out, this issue
      can't help but slide. No customers (they're dinging 1/2
      of their credit card customers?????); no revenue; no
      earnings; no dividend.

      Pretty easy to figure out,

      • 7 Replies to razor2k00
      • on how you can make money. Sell PBCT to me at 18.75 (short it if need be) and then buy it back at the 12 you are predicting. Easy way for you to beome rich!

      • Great article by Vern Silver, Bloomberg

        Seems many of the larger banks are seriously hurting
        (earnings-wise) cuz they INTENTIONALLY chased away much of their
        traditional customer base with poor service, crappy products,
        low interest, and exhorbitant and ridiculous

        They bought into the concept that they had to shed the
        "80%" of the customers that were dragging on earnings.
        So, these customers all ran for credit unions,
        community banks, and non-traditional banking service

        Guess what? The banks are screaming, because earnings
        are down and projected to drop further. Now they're
        saying: "earnings growht will slow this year because they
        cut customer services too much".

        DUH ! No
        customers=no revenues= no earnings

        So now they're
        planning on spending multi-millions $$ to try and lure
        back customers.

        But, once gone, the customers
        ain't coming back! They're all warm and cozy with their
        new, customer-friendly banks, and they want nothing to
        do with the likes of the bank that screwed them

        These banks would have to give them ALL of their
        accounts for free, for life, cut interest rates and fees
        by 30% of the nearest competitor, pay account
        interest at least 20% above the competition, and then give
        them all kinds of incentives (i.e., pay them) - and
        most STILL wouldn't come back.

        Stupid is as
        stupid does !!

        So, what does this have to do with
        PBCT? Well, apparently the big boys already went down
        this 80/20 pare the dead-weight customer road, and
        discovered it was a really bad move. And now they're
        fighting to keep their heads above water. So why is poor
        little People's Bank following in their footsteps?

        Any fool can see that to be more competitive, and
        hence more profitable, you need to CUT fees and
        interest rates to below the competition, and INCREASE
        customer service. Its called market forces. Working in the
        reverse direction is suicide (or is it just

        Go for it PBCT - the big banks have abandoned this
        course of action, You can't help it if you're behind the
        learning curve. Go see for yourself what happens when you
        alienate and drive away a large portion of your customer

        Incompetent management rules!! And it lives at People's Bank

        DUH, we're gonna reprice soz we can collect more
        money, and doz deadbeat customers will all goway an
        leave us alone.... yup yup yup!

      • Section 3, time range = 13:00 - 13:20, George W.
        Morriss (Executive VP & Chief Financial Officer) said,
        "Our credit card portfolio is a fixed rate portfolio,
        which means that we raise the rate as we see fit.
        Historically we've been reluctant to change the rate very
        often. Typically only once a year will we change a

        !! Note the implication that a fixed rate is not
        fixed for all time, nor should it be, as I mentioned in
        my posting #448 "Blame the Fed" !!

        Section 3,
        time range = 13:38 - 13:43, Mark K. Vitelli (Executive
        VP - Credit Card Services) said, "We traditionally
        lag movements in interest rates on the way up, and on
        the way down."

        Section 3, time range = 13:56 -
        14:09, Mark K. Vitelli said, "As George mentioned, we've
        repriced half the portfolio by 100 basis points this
        Spring, and we are in the process of repricing the
        portfolio and expecting the effect of that to be 125 basis

        !! Note this alludes to the fact that some we
        already repriced earlier this year, while others are
        staring to be repriced now in the 3rd quarter

        Section 3, time range = 14:41 - 14:47, Mark K. Vitelli
        said, "This is not dissimilar to what we did in the
        1994-1995 time period, where interest rates had risen

      • It is misleading to claim that PBCT is "dinging
        1/2 the customer base". There are two prongs to the
        repricing activity. First, there is the need to keep pace
        with changes in market rates (see my posting #448
        "Blame the Fed"). Second, there is the need for risk
        management. Many of those who had their rates adjusted
        probably fall into the first category, but not the

        If you were not in attendance at the 2000 Q2
        Earnings Conference then you may not have seen this slide.

        Likewise you may not have heard what was said.

        Section 2, time range = 5:48 - 6:05, George W. Morriss
        (Executive VP & Chief Financial Officer) said, "We have, and
        will continue, to reprice portions of the portfolio
        both in response to changes in market rates as well as
        to focus more on charging customers interest rates
        based on their risk profiles."

        Section 3, time
        range = 3:26 - 3:53, Mark K. Vitelli (Executive VP -
        Credit Card Services) said, "We have gone through and
        segmented the portfolio, and in fact part of the rise in
        interest income that we're forecasting for the rest of the
        year is repricing we did, as George mentioned, based
        on a risk basis to those segments of the portfolio
        that are more risky. And in fact we are closing lines
        and access to parts of our customer base to reduce
        our losses going forward."

        !! Note that the
        operative words here are "portions" and "segments", rather
        than "indivdiual customers" when discussing the
        repricing strategy, which refers to how your account has
        been categorized by the analysis rather than the
        notion that you have personally been singled out !!

      • Re: the notion that the PBCT share price will
        fall to $12, "The reports of my death are greatly

        Although the credit card services unit (which represents
        about 25% of the pie, according to the last annual
        report) has been performing poorly (at "break even"
        levels), the rest of the business units have been doing
        very well. Despite the varying opinions that have been
        posted here, the ultimate outcome of any complaints
        remains to be seen.

      • Here is another one that seems apropos. Is it an
        evil conspiracy, or a group of unintentional errors
        amidst an otherwise legitimate rate adjustment? Perhaps
        we should be looking for the simplest, most obvious

15.67+0.14(+0.90%)Sep 27 4:00 PMEDT