One of the reasons so many Americans are struggling with their credit card debt is because of rising unemployment. So what do creditors like
do? They put more people out of work.
AmEx announced today that it plans to fire about 4,000 workers on top of the 7,000 job eliminations announced in October.
The market will no doubt be pleased with the news. It's good to see the company taking the necessary steps in this challenging environment and all that. The market is myopic that way -- it cheers every job cut and than jeers at rising unemployment rates.
I don't remember what the market said when AmEx started expanding into different types of cards in an effort to grab market share from
or the battle for rewards cards with issuers like
Bank of America
That was probably considered a good thing at one point, perhaps not so good now.
Apparently the rainbow of cards concept didn't work out too well, so now AmEx is trying to save its way to higher profitability.
Not that the folks at American Express didn't pick good colors -- beyond the classic "green" card, there's the "Gold" and the "Platinum" of course. And don't forget the "Blue," the "Clear" and the "Plum." If color is not your thing, AmEx also offers the TrueEarnings Card from Costco, the Delta SkyMiles card and the Starwood Preferred Guest card.
If anything, the growth through new cards concept may have contributed to the problems the company is now trying to fix by handing out pink slips. The growing number of consumers unable to pay their debts prompted AmEx to set aside more reserves for failed loans.
Meanwhile, Congress and the Obama Administration are writing new laws that are supposedly going to protect consumers from various fees and rate hikes that are imposed by card issuers when folks fall behind on payments.
The banks don't like this idea very much, saying it will result in less credit at a time when Americans need more. Banks also don't like having to limit their recourse against bad consumers.
I wonder how many more jobs will be cut by credit card companies as a result of the consumer "protection" winding its way through Washington.
Seems to me that banks and consumers have been doing this dance for a long time -- and neither side has been known to show much constraint. What we end up with is reactionary corporate policies followed by reactionary political policies.
AmEx is a great case in point. Hindsight suggests that AmEx strayed too far from its model, encouraged no doubt by the credit lust of the American consumer.
Now AmEx is starting to rein things, but it's probably too late to stop the lawmakers.
Things aren't looking so plum now.
Hall is the editor of
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
The New York Times
International Herald Tribune
. Hall received a bachelor�s degree in journalism and political science from The Ohio State University and has taken graduate management science courses at Boston University.