Wall Street Wary of Credit Card Reform’s Impact

Despite a mostly positive group of earnings reports this week from the biggest credit card-issuing companies, forecasts of possible profit trouble ahead as card reform laws take affect are rattling Wall Street. Particularly worrisome to investors – which sent shares of American Express and Capital One tumbling Friday – were an analyst’s forecast and comments from executives at American Express and Capital One. “The lack of consumer demand for credit, across our businesses, is striking,” said Capital One Chief Executive Richard Fairbank.

Credit Card Write-Offs Still Troubling as Reform Looms

Facing a pivotal year ahead with hopes of a turnaround despite looming reform laws, most credit card issuers saw declines in December delinquencies – or the 30-days late rate – but charge-offs are still troubling. Another challenging year ahead for the credit card industry includes the implementation of reform laws next month that are expected to hamper profitability with the toughest restrictions yet on when and how to impose interest rate hikes or penalty fees.

More Credit Card Issuers to Drop Mandatory Arbitration

In the new year, a fast growing number of credit card holders won’t have to settle disputes over their charges through mandatory arbitration, a long-standing process that critics and lawmakers contend nearly always favor the card companies. Capital One became the third major credit card issuer to agree to leave out binding arbitration clauses in new consumer credit agreements next month, following the same decisions by JPMorgan Chase, the largest general-purpose credit card provider, and Bank of America.

Treasury Projects $19B Profit from ‘Bank Investments’

Bank of America has repaid it’s $45 billion portion of bailout money, bringing the total bank repayments to U.S. coffers to $118 billion, the U.S. Treasury said today. Moreover, the Treasury projects a $19 billion profit from its “bank investments” – stemming from the various bailout programs designed to stabilize the financial sector.

Analysts Upgrade AmEx, Capital One and Discover

Analysts at Bank of America/Merrill Lynch today upgraded three credit card companies – American Express (AXP), Capital One (COF) and Discover (DFS) – to neutral from underperform, bolstored in part by the better-than-expected jobs report on Friday.

Treasury to Reap $146.5M from Capital One Warrants

The U.S. Treasury will earn $146.5 million from the auction of Capital One’s stock warrants, an arrangement that stems from the initial bailout of the banking giant. The Treasury said today it priced the warrants at $11.75 each in yesterday’s auction of 12.7 million Capital One stock warrants.

Bailout Leftovers: Treasury to Sell Warrants for Capital One Stock

In its first sale of assets acquired under the unpopular bank bailouts, the U.S. Treasury will auction warrants to buy stock in Capital One, one of the top credit card issuers, at a minimum price of $7.50. Capital One shares closed at $38.09 on Tuesday on the New York Stock Exchange.

Chase, Nation’s Top Credit Card Issuer, Ends Mandatory Arbitration

JPMorgan Chase, the nation’s top credit card lender, said today it will no longer require customers to settle disputes through arbitration, a practice that lawmakers and consumer advocates claim to nearly always favor the credit card companies.