December 18, 2008
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News: Discover: Success.
Coming on strong, Discover Financial Services [DFS] find themselves in a good light. As part of the troubled credit card industry they've been dragged down with the rest, albeit, not as bad as the rest.. The differences are their structure and their reserves. Their latest moves were warmly welcomed by the financial investors when they finally decided to go ‘bank'. Last month they had announced they were financially secure to not need assistance from they lure of bailouts because they had better than average security from deposits. But now they have decided that succumbing to the drift of the added security of a bailout can provide them even better security and propel them to an even higher platform than they would otherwise be. As the fourth largest credit card network in our country, they now find themselves more robust than those larger institutions like VISA and MasterCard. This is a time when those less-floundering credit card networks are in the most prime position to move up.
Amid the collapsing Wall Street ratings which have prevailed and will continue to into next year, Discover have already enjoyed an eight percent jump in their stock valuation, just since the ‘go-bank' decision. They're looking at enjoying, as much as, 1.2 billion in government aid. As far as earnings, they've already doubled profits in this fourth quarter. When official reports come in next month they may shine the brightest. Coming from and bank-independent credit card network infrastructure, they have had the advantage of playing by their own rules. By requesting Federal Reserve approval to become a bank-holding company, they may lose some of that but the benefits appear to outweigh the liabilities. For example, they are not likely to be as impacted by the new restrictive regulations released today against the credit card industry because they have not been seen to promote the ‘deceptive and abusive' practices that the regulations are attacking.