In This Economic Meltdown, Anything Goes
Take a gander at this paragraph from a Wall Street Journal story by Robin Sidel on Oct. 20, 2008:
AmEx recently slapped a $1,100-a-month spending limit on John and Monica Bell's platinum AmEx charge card. The reason: AmEx customers who pay with plastic at the same places where Mrs. Bell shops and have the same mortgage lender have poor repayment histories, according to a letter sent by AmEx.
The couple pays $450 a year for the card—which promises "no pre-set spending limit." The couple routinely spent $5,000 a month—that's $60,000 a year—and has never been late with a payment.
If the data goons are allowed to start treating blue-ribbon American Express Platinum Cardmembers like chronic deadbeats, what will happen to the rest of us?
The excess of zeal that fueled the subprime real estate debacle has turned into an excess of fear.
American Express and Me
I go back a long way with American Express. My father wrote the authorized corporate biography, "AMERICAN EXPRESS—A Century of Service" (Doubleday, 1950). I worked in the AmEx mailroom at headquarters on the lower Broadway during the summer of 1956. The president and his wife, Ralph and Edna Reed, and their daughter Phyllis, were often over for cocktails and dinner when they summered next door to us. I've been a Cardmember since 1964 and have a Gold Card now. I haven't missed a payment in 44 years.
American Express Off the Hook
I went to the AmEx Web site and looked up the Platinum Card. Where—in gray, sans serif mousetype—it says "No pre-set Spending Limit." Next to this promise is a mousetype blue dagger (†). When you click on it, up comes a gray box containing mousetype, gray copy:
The Platinum Card has no pre-set spending limit which gives you purchasing power that adjusts with your use of the Card. No pre-set spending limit does not mean unlimited spending. Your purchases are approved based on a variety of factors including current spending patterns, your payment history, credit record, and financial resources known to us.
"If [you are] spending in a way that looks like a pattern of other people who had credit trouble before," AmEx spokesman Michael O'Neill told the Journal's Robin Sidel, "it gets added into the mix."
I imagine suddenly having my credit cut off, stranded in Angkor Wat with the letter of explanation from the American Express Gold Card people sitting under the mail slot of my front door in Philadelphia, 11,000 miles away.
After 44 years, suddenly I'm scared to death of these bastards.
An Excess of Fear Turns Into an Excess of Lies
Here's the teaser on an outer envelope ING Direct sent to Denison Hatch.
EARN MORE THAN 7X THE NATIONAL AVERAGE
WITH YOUR ORANGE SAVINGS ACCOUNT
PLUS, WE'LL GIVE YOU $25 TO GET STARTED.
7X seemed, to me, a bit excessive.
Inside this mailing was a check for $25, made out to me, along with a personalized letter in mousetype, sans serif font.
In the letter is a chart showing that average savings accounts nationally yield 0.38% and money market accounts yield 0.63%. On the other hand, ING's Direct Orange Saving Account yields a whopping 3.00%.
I went to the ING's source—bankrate.com—and found that the average taxable money market fund ranges from 2.06% (HighMark U.S. Gov't MMF) to 3.03% (Oppenheimer MMF).
In other words, ING's sales pitch offering "7X the national average" appears to be a flat-out lie perpetrated by people with an excess of zeal going after the sucker market.
Iceland did this, offering savers across Europe 5.45% interest on savings accounts. Iceland went bankrupt two weeks ago, leaving a legion of British depositors twisting in the wind to the tune of $1.8 billion.
I wouldn't have noticed any of this, except that in my vast archive are several stories from October 20, 2008, about the Dutch government bailing out ING with €10 billion (US$15 billion). Meanwhile, ING promises depositors that their money is "FDIC insured."
So if ING burns through its €10 billion from the Dutch, Uncle Sammy (e.g., thee and me) will take over the obligation.
All I can think of is the Cole Porter lyric:
The world has gone mad today
And good's bad today
And day's night today
And black's white today ...
The title of the song—and the show: "Anything Goes."
P.S. (1) From this morning's New York Times:
A Question for A.I.G.: Where Did the Cash Go?
The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting.
"You don't just suddenly lose $120 billion overnight," said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz.
—Mary Williams Walsh
(2) On the CBS radio network news at 6:00 a.m. this morning, Frank Settipani reported that 52 percent of the federal bailout money will be used to pay dividends to bank stockholders.
P.P.S. Yo! How 'bout them World Champion Phillies!