April 08, 2010
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News: Chase Continues With Threats
JPMorgan Chase & Co. continues to threaten lawmakers and credit cardholders about the consequences of new card reform. The company is among the top financial services institutions in the world with operations in 60 countries and holds the largest market capitalization. Chase is one of the largest issuers of credit cards in the U.S. as well as the World. According to a release by the company's CEO, Jamie Dimon, JPMorgan expects to lose between $500 and $750 million as a result of new credit card regulation which became effective on February 22nd. Mr. Dimon said that the bank has been hit very hard by the reform which prevents the bank from operating in a risk free environment.
Dimon indicated that the company feels most of the credit card law provisions are appropriate and that the bank had already removed some of the practices that the law now prohibits. Some of the most abusive included the universal default where cardholder's interest rates increased automatically if payment was even minutes late. Others included increasing interest rates on current balances, unfair fees such as lack of activity or over the limit transactions approved by the bank but without consumer authorization. However, the bank found the restriction regarding the application of credit card payments to the balance carrying the highest interest rate will significantly impact the bank. In response to this provision, Chase reduced credit limits and canceled some customer's cards.
Consumers on the other hand, have applauded the provision which mandates payments be applied to the highest drawing interest balance. Without a doubt, this could be the most valuable and significant provision in assisting cardholders in reducing credit card debt. Dimon also indicated that Chase modified its marketing strategies to sharply reduce the number of low introductory and balance transfer rates. Furthermore, 15 percent of Chase's current customer base will no longer receive future card offers due to high risk factors. In its place, Chase will place a greater focus on product innovation in the future.