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Member
bugheman
Posts: 25
Registered: ‎07-16-2009

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?

My letter I got that Chase was "raising interest rates to maintain profitability on the account". Then I read this

http://www.huffingtonpost.com/2009/07/16/jpmorgan-chase-profit-up-_n_235173.html

Says that Chase's profits up 36% in Q2 - I guess they did their job! 

Seems like canceling cards and treating clients shady makes you a ton more money despite the bad economy.

Frequent Contributor
Underh20
Posts: 322
Registered: ‎11-15-2008

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?


bugheman wrote:

My letter I got that Chase was "raising interest rates to maintain profitability on the account". Then I read this

http://www.huffingtonpost.com/2009/07/16/jpmorgan-chase-profit-up-_n_235173.html

Says that Chase's profits up 36% in Q2 - I guess they did their job! 

Seems like canceling cards and treating clients shady makes you a ton more money despite the bad economy.


 

You missed this part:

 

"JPMorgan's credit card services division posted a $672 million loss in the quarter, compared with a year-earlier profit of $250 million, as more cardholders default. Revenues also fell with the introduction of new rules designed to protect consumers."

Member
bugheman
Posts: 25
Registered: ‎07-16-2009

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?

And get this - chase has turned those cancelled cards into income - further boosting and boasting about profits!!

http://www.nuwireinvestor.com/blogs/investorcentric/2009/07/jpmorgan-creates-illusion-of-profits.html

 

Check out these quotes from the above article

"To the contrary, many analysts – including Money Morning Investment Director Keith Fitz-Gerald – say these profits are merely a mirage created by an obscure accounting rule that allows banks to transform “toxic debt” on their balance sheets into income."

"In JPMorgan’s case, the firm took on $118.2 billion in toxic debt when it acquired Washington Mutual Inc. last year. As a receiver of that debt, JPMorgan was allowed to mark that debt down to “fair value,” or $88.65 billion. But now, the bank says that those same debts may appreciate by some $29.1 billion over the life of the loans. And as those loans are paid back, that money is booked as profit."

 

What this means (in english) is that Chase gets the opportunity to take our WAMU credit cards - cancel or raise rates on them from the original negotiated rate with the original bank - write down a portion of their "bad" debt (those already defaulted and/or in default) then force us all to pay back our loans at a higher rate (and make up some money from the lost "bad customers) and book it all as profit. To put it in layman's terms, OUR BANK, OUR RULES, 

 

 :smileysad:

 

Member
bugheman
Posts: 25
Registered: ‎07-16-2009

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?


Underh20 wrote:

You missed this part:

 

"JPMorgan's credit card services division posted a $672 million loss in the quarter, compared with a year-earlier profit of $250 million, as more cardholders default. Revenues also fell with the introduction of new rules designed to protect consumers."


Good point - I didn't miss this part. None of the banks expect to make profits on credit cards this year - with an increased amount of unemployment more clients are going to use credit cards more than ever. I understand this part. The shady thing behind all of this is that most banks have gotten themselves in this mess by keeping most middle class credit card borrowers "in debt" with no way of return. I'm not mentioning that famous speech that was made (chickens have come home to roost), however Chase should have realized that when they purchased WAMU just like WAMU realized this when they purchased providian.

Yes the point is not regarding credit and good vs bad accounts, point is that chase should have made that clear when they sent over the letter saying that they were going to be the new cardholder that "we are going to let you keep your account open for xxx period of time on a trial basis then re-evaluate you to see if you are credit worthy. If so, we will keep your account open. If not, we will notify you IN WRITING BEFORE we close your account". NOT SO - they just said "we closed your account your screwed, bye-bye"

 :smileymad:

Regular Contributor
RachelRachel
Posts: 234
Registered: ‎04-12-2009

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?

My sister got her Chase (Wamu) cc closed effective 7-10-09 and DH had his closed effective 7-14-09.  Neither got a letter in advance, just a decline when they tried to use the cards.  Chase told both that they closed due to information obtained from Experian.  I am worried that my card will be next.  :smileysad: 

 

Bronco, could you please PM me about how you got your card back.  DH and I are in the midst of getting a mortgage, we've been pre-qualified, but that could be jeopardized by the time we go under contract and are re-evaluated by the bank underwriter, right?

Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?


Underh20 wrote:

bugheman wrote:

My letter I got that Chase was "raising interest rates to maintain profitability on the account". Then I read this

http://www.huffingtonpost.com/2009/07/16/jpmorgan-chase-profit-up-_n_235173.html

Says that Chase's profits up 36% in Q2 - I guess they did their job! 

Seems like canceling cards and treating clients shady makes you a ton more money despite the bad economy.


 

You missed this part:

 

"JPMorgan's credit card services division posted a $672 million loss in the quarter, compared with a year-earlier profit of $250 million, as more cardholders default. Revenues also fell with the introduction of new rules designed to protect consumers."


I think everybody missed this sentence, which is a crock of caca de toro. The "introduced" FRB credit card regulations do not take effect until 01JUL2010. How could they possibly be cited as a cause for decreased revenues. The assertion of this claim should have been closely questioned. This is just plain poor reportage. They probably cribbed this whole story from a press release.

Established Contributor
Revike
Posts: 720
Registered: ‎05-04-2007

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?

[ Edited ]

I think the effective date for most of the new regulations is Feb. 20, 2010, although a couple of provisions go into effect next month, and a few others go into effect later in 2010 after the FRB has written them.

 

I believe the July 1 effective date was part of the earlier (House?) version of the bill, and was moved up to February in the final version.

 

Of course, being future dates, they cannot be used as reasons for reduced profits yet. Another example of shoddy financial journalism ...

Message Edited by Revike on 07-20-2009 12:28 PM
Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?

[ Edited ]

Revike wrote:

I think the effective date for most of the new regulations is Feb. 20, 2010, although a couple of provisions go into effect next month, and a few others go into effect later in 2010 after the FRB has written them.

 

I believe the July 1 effective date was part of the earlier (House?) version of the bill, and was moved up to February in the final version.

 

Of course, being future dates, they cannot be used as reasons for reduced profits yet. Another example of shoddy financial journalism ...

Message Edited by Revike on 07-20-2009 12:28 PM

 

Not according to the FRB:

 

http://www.federalreserve.gov/newsevents/press/bcreg/20081218a.htm

 

The purpose of the bill is to speed up the changes.

Message Edited by creditwherecreditisdue on 07-20-2009 04:22 PM
Established Contributor
Revike
Posts: 720
Registered: ‎05-04-2007

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?

[ Edited ]

The FRB regulations were from December. Congress passed a bill encompassing the FRB rules and Obama signed it near the end of May.

 

 http://usgovinfo.about.com/b/2009/05/22/credit-card-reform-bill-signed-by-obama.htm

 

With Americans now owing more than $945 billion in credit card debt, President Obama today signed into law a bill that will severely limit the ability of credit card issuers to raise interest rates and fees.

“With this bill we are putting in place some common sense reforms designed to protect consumers,” said President Obama in signing the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 (H.R. 627).

The bill largely codifies regulations imposed by the Federal Reserve in 2008, but makes them effective in February 2010, five months sooner than proposed by the Federal Reserve.
Message Edited by Revike on 07-20-2009 12:45 PM
Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009

Re: QUESTION FOR THOSE WITH CANCELLED WAMU/CHASE?

[ Edited ]

So there is, and it can be found here:

 

http://www.creditcardreform.org/pdf/credit-card-bill-2009.pdf

 

and it states:

 

SEC. 3. EFFECTIVE DATE.

This Act and the amendments made by this Act shall become

effective 9 months after the date of enactment of this Act, except

as otherwise specifically provided in this Act.

So it moves up the date up a few months.

 

The point is still valid. There is no effective law at this time. They can't really blame their losses on it. The article goes on to state:

Also, JPMorgan executives said, it's not yet known how credit card legislation that recently became law will affect profits in the card business

Classic doublespeak gobbletygook.

Message Edited by creditwherecreditisdue on 07-20-2009 04:24 PM

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