not your usual financial crisis

I was listening to NPR's Fresh Air host Terry Gross interview Elizabeth Warren. They talked at length about the bailouts, Warren's committee to review TARP disbursements, and the coming round of $2 trillion or so in bailouts for which there is no oversight plan.

Terry asked her about credit card debit. Elizabeth reminded listeners that these were very unusual economic times, unlike any other when a major credit card company - American Express is PAYING customers to close their accounts. What kind of business model is that? Pretty shrewd, apparently.

As she went on to say, either customers could pay, and American Express were losing a good customer and paying to do so. Or, this was a bad customer and American Express was politely but firmly encouraging the customer who couldn't and wouldn't pay to move their account balance elsewhere. Other banks are do this by other means - raising the interest rate on doubtful accounts from 9% to 29% for example.

Who will be the winners after the dust settles? It depends on the regulations that are put in place. Warren hopes that it would not allow for private profits and taxpayer funding of financial loss as is presently the case.

These are interesting times in which we live ...
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