JPMorgan Chase Says New Credit Card Law To Cost Firm At Least Half A Billion Dollars A Year

The nation's second-largest bank said a new law that limits unfair rate hikes and hidden fees will cost it as much as $750 million a year.

JPMorgan Chase revealed the estimate Monday in a regulatory filing:

In addition, as a result of the recently-enacted credit card legislation, management estimates, which are preliminary and subject to change, are that Card Services' annual net income may be adversely affected by approximately $500 million to $750 million. As a result of all these factors, management currently expects Card Services to have a net loss for the full year 2010.

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 bans or limits deceptive and unfair practices, including retroactive rate increases, late fee traps like weekend deadlines and "universal default," or raising rates because of a borrower's delinquency with another lender.

The law gives the industry until February 2010 to comply with most of the rules, but since many banks started to jack up interest rates in advance of enactment, Congress is now considering moving up the date to December. The Federal Reserve cautioned Congress against it.

Comments

[porsche996]

Nice spin to the article by Chase.

If I was writing it might say something more like,

Banks stealing and extortion of funds from CC customers will be reduced by $500 million with new legislation.

[pjwrites]

Aw, poor banksters! Why . . .that's gotta be like nearly .00005% of its annual profits or something!!!
But look at the bright side! Us 300 million consumers will save ourselves a neat $1.50 on our credit cards next year!
Unless they can buy a new law.

[duchessofdork]

BoofreakinHoo.

[logicalchoice]

So he admits that he was making 500,000,000 a year by ripping the American people off. And no one will ever go after him, but boy if you don't pay your bills you will suffer for the rest of your life.

[duchessofdork]

Exactly, and he acts like we should all feel sorry for him/them. Pffft!

[oath of fealty]

This more than anything else is why I don't trust Obama anymore.

The moment it became clear he wasn't going to fight to actually clean up the financial industry is the moment it became clear that the hope and change rhetoric was just that, rhetoric. All he cares about is keeping corporate money in dem hands, he doesn't dare anger his corporate sponsors.

good articles 4 slow news day: http://financeopinionss.blogspot.com

the system needs to be overhauled cuz nothing seems to change . m

[Furby2]

A law passed by Obama's administration will save consumer half a billion dollars a year. Please refer to above article.

[Sundialsvc4]

You'd better be very glad that old man Pierpont is stuck underground for the rest of eternity, because if he could dig himself up he'd probably wring your neck.

How is it even --possible-- for an I'm-suppos­edly-a-ban­ker to say with a straight face, simultaneously (a) that his company is "too big to fail" and (b) that he's doomed to lose $500+ million during the next year by selling money at 35% interest?

Ahem.

I'm no banker, but even I can tell you how to make money ... lots of it ... at this little game. And the fact that you neither know how to do it, nor want to do it, is proof of the assertion that your "company" is all-crime and no-business.

You make money in the credit-card business by making the customer pull out his credit-card instead of cash when he's got enough cash in his pocket. Your competition is cash. You charge the customer very low(!) interest rates, and you re-introduce the consumer interest tax-deduction as added sugar.

You make the money from merchant-fees. A very small percentage that's tacked on to every purchase and deducted from the merchant's settlement. The merchant doesn't mind, though, because the added liquidity you've given to his customers encourages sales.

The "mega bank" concept is inherently and structurally flawed, as Messrs. Glass and Stegall understood. It will implode. It cannot do otherwise.

[sabredance]

Good post.

Indeed, Big Banks Are Not More Efficient (http://seekingalpha.com/article/169785-big-banks-are-not-more-efficient). So break them up.

And let's not forget it was the Morgan Mafia that invented CDOs.

As you said, "All crime and no business."

[duchessofdork]

Excellent! I nominate you for CEO! Or at least to be on that board with Elizabeth Warren. Logic, reason and common sense! Bravo!

[the964kid]

F*ck JPMorgan.

[rowzeer]

A new law that says I can't steal from my neighbor will cost me $5,000 a year boo hoo!!!

[Robert Cantor]

YEAH!!!!

[Musiker]

Bear with me...please be patient...

I'm sure I'll be able to type a coherent statement as soon as these tears stop dampening my keyboard!

...just a moment...

[duchessofdork]

LOL!

[keepyourheaddown*]

GOOD!

EFF U...

[PropTrader]

Do you realize that when you use a credit card you are spending someone else's money? The bank entity is meaningless. You're spending the money of the depositors, investors, and shareholders. Credit in all forms is a privilege, not a right. You CHOOSE to use a credit card----no one forces you. If you don't like the terms, then don't use a credit card and your problem is solved. Period.

[rowzeer]

The problem is they keep changing the terms. Besides, it's my money, my uncle Sam lent to the bank at 0%

[sabredance]

Bingo. Succinctly put, too. It's amazing how many of these credit card responsibi­lity/contr­act types just can't do the math...

[PropTrader]

I agree that the terms shouldn't be changed once a contract is signed. Also, the CARD Act does bring more transparency to the system, which is a good thing because the consumer has the right to know the risks he/she is taking on before entering into the contract.

I was little confused by your last comment though. How is government lending money to the credit card companies at 0%? Cards are generally funded with deposits (rates vary widely) and securitizaitons (LIBOR + 1% to 3%). Even the government bailout money (TARP) carries a 5% coupon.

[Elyriaohio]

OK,
But when I try to shove cash into my computer to pay for purchases, it crashes!
Any more bright ideas?

(I would think the 3% they charge the seller would be enough.)

[logicalchoice]

its never enough. money money money, more more more, mine mine mine.

[grooveygrover]

stop using credit cards, period

[logicalchoice]

That's why he's loosing 500,000,000 a year. because he charges so much interest that noone will use thier cards. smooth move ex-lax.

[Democratt]

This more than anything else is why I don't trust Obama anymore.

The moment it became clear he wasn't going to fight to actually clean up the financial industry is the moment it became clear that the hope and change rhetoric was just that, rhetoric. All he cares about is keeping corporate money in dem hands, he doesn't dare anger his corporate sponsors.

good articles 4 slow news day: http://financeopinionss.blogspot.com

the system needs to be overhauled cuz nothing seems to change .

[comicpro]

They will make it up somewhere else. Cry me a freaking river!