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