James Clay Fuller

Things We're Not Supposed to Say

Monday, March 09, 2009

A personal story; bankers are idiots

You can hardly have a conversation these days that doesn't at some point include angry mention of bankers.

The anger is about the taxpayer bailout of banks and the fact that the same dribbling idiots who brought the banks and our economy to ruin are still in charge of those institutions, drawing down their millions in annual pay for incompetent and profligate performance.

Count me among those who are enraged by the fact that the bailouts have not included, as a requirement for payment, that at least the top three layers of management of the bad banks be fired.

(I'll write more on this soon, but do not believe the crapola about management talent being so rare that we must keep those people. In any substantial institution, there are dozens, in the really big ones even hundreds, of people well below the levels of top management who are smarter and better qualified than the top officers to run the organization. The nature of top executive selection in large American corporations guarantees that almost all of said corporations will be headed by jackassess, albeit jackassess of good appearance and impressive demeanor.)

I just was touched, personally, by a bank –- a bailed out bank -– in such a way as to demonstrate the ingrained foolishness of our MBA-addled management class and the wrongheadedness of corporate culture in this country.

It's a more personal story than I'm comfortable telling, and it reflects badly on my judgment, but it so perfectly exemplifies one type of nuttiness plaguing our banks and other big corporations that I'm going to tell it anyway.

For a goodly number of years –- I'm not sure how many, but at least 15, probably 20 or more –- my wife and I have had a U.S. Bank credit card.

U.S. Bank is the lead bank of U.S. Bancorporation, which recently sold $6.6 billion in preferred stocks and warrants (junk, in plain language) to the government. That “sale” was part of the bailout program.

Frankly, embarrassingly and carelessly, I let the balance on that card climb to a substantial (for us) level. Like so many others, I've been busy trimming monthly expenses over the past year, and figured to get to that card balance very soon. The balance came from a series of unexpected but necessary house repairs and our penchant for travel.

I wasn't overly bothered, not as bothered as I should have been, because, due to our very high credit score and top-of-the-heap credit rating, our interest rate on the card balance was less than 8 percent. That's real money, but not terrible in this day.

About two weeks ago, I paid slightly more than half the card balance, with the intention of making another substantial payment when this month's bill arrives.

A week ago, I received a notice from U.S. Bank that it is raising the interest rate on our card balance, as of April 1, to 20.99 percent. From, effectively, 8 percent to 21 percent -- a near tripling of the interest rate to a level that in most times and in most places would be classified as usury and would be illegal. But, of course, over the past 30 years or so, all usury laws have been erased by our governors and those they serve.

I called the “customer service” department of the bank and demanded an explanation. Today, as I write this, I got a brief note claiming that the near-tripling of the interest rate on our card balance was because of “late payments” and our having gone over the card credit limit.

Since I am never late with payments on any bill, and could recall no time at which our charges went over the card's limit, I started digging through my files. None of our bills for the past 15 months showed a balance over the limit, and none that I could find indicated late payment. So I called the bank again.

My mistake. It turns out that, undoubtedly because the mail was slower than I expected, two times last year my payments were two days late. And once, because of an automatic charge that I had forgotten about, the bank claims that I once went over the credit limit for two days –- although I believe that is wrong, given the balances recorded on my bills and the size of the charge in question.

But my mistake anyway. The rules of cut-throat American business mean one should never play it so close as to allow the possibility of a mail delay causing a late payment and never get within $1,000 of your credit limit on anything (or, probably, within $200 if your credit limit is $1,000 or less).

This has done my wife and I real damage. The reports from U.S. Bank have reduced us from an A credit score to a C-plus score, a very thin hair below a B score. Presumably that is temporary, but it could last a long time simply because credit issuers of all types believe it is to their advantage to charge as much as they can get from anybody at any time.

In America today, long-term high performance counts for nothing, and no slack is allowed for minor error, even by customers of many years.

The American management credo calls for gouging whenever and wherever possible. Grab what you can and to hell with relationships, common sense or mitigating factors.

Of course I knew that, and the carelessness was mine.

Being, still, more fortunate than the rapidly growing majority of Americans, I will pay off the U.S. Bank credit card this month. We will never use that card again. We won't cancel it, of course, because in the nasty wonderland of American banking, your credit rating is reduced for canceling a card account. But we won't use the damned thing again. Ever.

And what has U.S. Bank gained from its practice and from harming us, its long-term customers?

Well, it will receive no more interest on the credit card in question. Rather than slightly less than 8 percent on balances that tend to rise and fall with the events of our lives, it will get no interest because there will never again be a balance.

If my wife and I were in the financial shape of what now is a substantial majority of Americans, we probably would stop using that card, but we'd go on paying 21 percent interest on the balance. No doubt that is happening to many people. But a growing number of such people won't be able to reduce balances while paying such usurious rates, and, eventually, literally millions will give up trying.

The result of such vicious banking practices must lead to increased bankruptcies. It cannot be otherwise.

In the long run, the banks will lose.

But it doesn't matter to them. They can't see such obvious facts. The culture and the boobs at the top demand that the banks gouge and grab until there is nothing left to grab.

I'm grateful that I'm still able to step away and give them the proverbial raised middle digit in parting.

A final note: Today I received in the mail from U.S. Bank several checks, which could be used to draw against our credit card account. It offered a 1.9 percent interest rate on any balance we might create by using those checks –- unless there should be a late payment, of course, or it rains on a Thursday after a new moon, or the bank president's dog gets fleas. The bank sends us such checks several times a year. We never have used one. Never will. This batch has already gone through the shredder.