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Friday, October 16, 2009

BofA weighs radical changes at Del. card centers

Bank of America Corp. is weighing big changes to its Wilmington, Del.-based credit card division, the biggest in the U.S. and a major employer of bank and call center workers from Delaware and Philadelphia's southern suburbs.

"The business has changed," lame-duck ceo Kenneth D. Lewis told investors Friday. He blamed the federal government's recent pro-consumer moves: "The inability to do risk-based pricing [since Congress and the Fed tightened rules on raising credit card interest rates] has caused us to look at things differently." Read transcript here.

"And so we have a lot of people looking at the business, talking about and looking at the changes that need to be made, both in infrastructure and other ways we can make money, but it would be premature to tell you what it's going to look like in any exact form, but it is going to be different. We acknowledge that and we are working on it." Crosstown arch-rival Chase Card Services is beefing up marketing despite losses.

Three years ago, BofA paid $35 billion for Wilmington-based MBNA Corp., the largest private employer in Delaware with over 10,000 workers. BofA cut a few thousand jobs - it won't say how many - but it still occupies blocks of space south of the city's downtown Rodney Square and outside town.

Meanwhile the card business has tanked; Americans are late on $1 of every $10 they owe on Visa and MasterCard; and Congress and the Federal Reserve have passed rules limiting banks' ability to boost card rates at will. BofA says its card losses are still rising, though late payments have started to fall.

Will BofA expand or shrink the card business? Could it be spun off again in an IPO or private buyout? It's run by Ric Struthers, a longtime MBNA executive, though others from founder Charles Cawley's old management team have moved on.
Posted by Joseph N. DiStefano @ 6:38 PM  Permalink | 3 comments
Comments   
  • 0 like this / 0 don't   •   Posted 8:23 PM, 10/16/2009
    Americans are late on their payments which allows the banks to collect late fees. I'm weeping for these guys, truly.
    — bgpoppapump
  • 0 like this / 0 don't   •   Posted 9:58 AM, 10/17/2009
    Just ignore the unsecured debt if you have nothing to lose. Pennsylvania law prohibits wage garnishment. If you are mired in the abyss, ignoring them, the calls, the debt won't make any difference to the disaster zone that is your unemployed, foreclosed upon life. Do not be fool and agree to the banks. If you have nothing to offer, just ignore and rebuild your life. You need all of your resources, NEW NATIONAL DEBT CARTEL DIRECT ACTION.
    — Fernando08
  • 0 like this / 0 don't   •   Posted 7:18 AM, 10/19/2009
    My biddy received a letter from B of A on Saturday stating that they were raising the rate on his credit card to 29.99% . Isn't that insane !
    — Joe R.


3 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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