American Express, AMEX, reported a 79% drop in earnings in the fourth-quarter. I rounded it up to 80% because it just made me feel better.
Apparently American Express customers are defaulting at a higher pace than expected and the downturn in the economy has lead to financial hardship of many card members. Could that be because they were allowed to get overextended on easy credit?
It is reported that cardmember spending fell 10% from the year before.
Delinquencies of 90 days or more rose to 3.1% of American Express’s managed U.S. lending portfolio, from 1.8% in the prior year. The portfolio’s write-off rate climbed to 6.7% from 5.9% in the third quarter and 3.4% in the prior year.
Luckily for American Express, they were approved in November for bank-holding status to partake in the government’s Troubled Asset Relief Program for bailout money. However, if ‘we the people’ were to treat American Express how they generally treat consumer in financial trouble the Treasury Department will tell them there is nothing they can do for AmEx and then sue them. I’m think we should send AmEx to arbitration to be judged by a panel of poorly treated American Express customers.