No More Mr. Nice Guy

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It's not always easy to be nice. I'm a nice guy and I care about people. I want them to have jobs and I want them to take care of their families. I want all of these things for Americans everywhere. That's why, as the financial sector deteriorated and the government bail out program was considered, I supported it. After all, we were told, this would help shore up the banks and that would help credit markets loosen up. The credit markets, they said, were essential to getting Main Street the lubrication it needs to run its businesses every day.

So, now, as a taxpayer, I'm also a shareholder to several of the country's leading financial institutions. As such, I'm exercising my right to tell management what I think.

I think that I'm getting peeved. Here's an example of why my blood is starting to boil:

First, on Nov. 12, we saw this headline:

"American Express Co. is seeking $3.5 billion in funds under the government's plan to directly invest in financial firms."

Then, on Dec. 1, I received this in the mail:

"Two domestic airline tickets and an American Express Rewards Plus Gold Card with no annual fee for the first year. See Details Inside."

What's the problem? This credit card offer was sent to my FOUR-YEAR OLD CHILD!

I know, I know, we've all heard the story about the dog getting credit card offers and we know these credit card marketers are among the most active list buyers in the world and clearly they bought my son's name off one of the kiddie magazines we subscribed him to. So, is this just another cute story about a kid and a credit card? I don't think so.

In Joe Nocera's recent blog, he shared with us an industry insider's account of how credit decisions are made in the industry:

"I recently had a client apply for a credit card. She is a homemaker, with no personal income. The house she lives in is in her husband's name. She would have asked for a $3,000 credit line, just to pay miscellaneous expenses and to establish some credit on her own. So the computer is told that her household income is $150,000; her mortgage/rent payment is zero. The fact is that her husband's mortgage payment
is $7,000 a month (which he got with a no income verification loan). She had a good credit score, but limited credit since she has only lived in this country for the last three years. The system gave her an approval for a $26,000 line of credit!"

He goes on to describe some of the failures in legislation to protect consumers from these absurd systems and concludes with this:

"I've been reviewing many of the banks' annual reports over the last month and there is no question that the default rates are on the rise. If Congress doesn't act today, the bankers will have their hats in their hand before we know it, and doing another a tap dance before the Senate Banking Committee, and asking to be bailed out once again with our tax dollars. Sad, but true."

Well, as a taxpayer and as a shareholder, I would say that my tolerance to endure this insanity is quickly -- and I mean quickly -- drying up. This madness has to stop. We have to learn to live on the money we have. If we don't, I'll need those domestic airline tickets American Express offered my son -- to get off of this sinking ship.

Last updated: Dec 22, 2008

LEWIS SCHIFF | Inc. Business Owners Council

Lewis Schiff is the executive director of the Inc. Business Owners Council. His latest book is Business Brilliant: Surprising Lessons From the Greatest Self-Made Business Icons.




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