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Showing posts with label visa. Show all posts
Showing posts with label visa. Show all posts
Wednesday, November 14, 2007
Wednesday, November 07, 2007
Associated Press Goofs on Visa® / Amex® Settlement Story (WayTooHigh.com)
Wow, did the Associated Press goof. They must have had all the lead financial reporters covering the market plunge on Wednesday and had a second-string reporter copy press releases rather than research what is a huge admission by Visa®. You would think that $2,250,000,000 was enough money to get the story right?
According to AP, "The truce announced Wednesday rids Visa of a potential albatross before the San Francisco-based company's initial public offering of stock." The reality is the AmEx® settlement is puny when compared to the more than $100,000,000,000 mega-billion dollar violations that Visa, MasterCard® and their member banks could owe in our class-action merchant interchange litigation. With more than eight-hundred WayTooHigh.com news and commentary postings - spanning more than 2 1/2 years - and with a great deal of attention drawn towards our litigation, Visa and its sister payment network, MasterCard, are not in the clear, by any means.
Extracted from the preceding SEC IPO filing, in MasterCard Inc's own words:
1) "... We have not established reserves for any of the significant legal proceedings in which we are currently involved."
2) "If we are found liable in any of these lawsuits, we may, among other things, be forced to pay damages and/or change our business practices and pricing structure, which could have a material adverse effect on our revenue and profitability, or, in certain circumstances, even cause us to become insolvent, and result in a significant reduction in the value, or the complete loss, of your investment ..."
3) "If we are less successful than Visa in defending interchange fees, we could also be competitively disadvantaged against Visa."
4) "If we are ultimately unsuccessful in our defense of interchange fees, such regulation may have a material adverse impact on our revenue, our prospects for future growth, and our overall business."
Largest Planned IPO Since Google has No Safety Net (WayTooHigh.com)
If you read into the AP story, it appears that Visa's IPO will now face calm waters. Hardly. Just look at their SEC filing and very clear risk factors that if [when] we are successful and prove our case that they illegally used their market power to conspire to fix prices, along with the triple damages, they could face "insolvency." The same is true for MasterCard as well. Can't get any clearer than that!
"Besides raising financial uncertainties, the case threatened to raise embarrassing questions about Visa's past business practices with a September trial date looming," said AP. Embarrassing?, just read the prior eight-hundred and one WayTooHigh.com postings! Overlooking our weak grasp of English and liberal rules of grammar, and you see something much more ominous.
Although Visa today did not acknowledge any wrongdoing, a first-grader would know that something must have happened as they prepare to hand out $2,250,000,000. Could you imagine if they DID do something wrong?!
According to the AP story, "American Express' three-year-old lawsuit painted an unflattering portrait of Visa, alleging the network operator conspired with some of its largest card issuers to thwart American Express' growth." So far, MasterCard's head remains in the sand. Everyone at the card association seems blind to the reality of our case, especially Sharon Gamsin, their PR and communications hack, who according to the same wire story said "MasterCard remains confident about its defense against the allegations." Sure. Since the same financial institutions which own and control Visa and gave the green light to settle, were also on the MasterCard and Visa boards for many years, what's the difference?
Getting back to that first-grader, even they would have to conclusively understand that MasterCard is next to recognize that the game is up.
"Before IPO, Visa Reaches a $2.25 Billion AmEx Antitrust Settlement" (Digital Transactions)
[commentary: WayTooHigh.com, via AP news story]
According to AP, "The truce announced Wednesday rids Visa of a potential albatross before the San Francisco-based company's initial public offering of stock." The reality is the AmEx® settlement is puny when compared to the more than $100,000,000,000 mega-billion dollar violations that Visa, MasterCard® and their member banks could owe in our class-action merchant interchange litigation. With more than eight-hundred WayTooHigh.com news and commentary postings - spanning more than 2 1/2 years - and with a great deal of attention drawn towards our litigation, Visa and its sister payment network, MasterCard, are not in the clear, by any means.
Extracted from the preceding SEC IPO filing, in MasterCard Inc's own words:
1) "... We have not established reserves for any of the significant legal proceedings in which we are currently involved."
2) "If we are found liable in any of these lawsuits, we may, among other things, be forced to pay damages and/or change our business practices and pricing structure, which could have a material adverse effect on our revenue and profitability, or, in certain circumstances, even cause us to become insolvent, and result in a significant reduction in the value, or the complete loss, of your investment ..."
3) "If we are less successful than Visa in defending interchange fees, we could also be competitively disadvantaged against Visa."
4) "If we are ultimately unsuccessful in our defense of interchange fees, such regulation may have a material adverse impact on our revenue, our prospects for future growth, and our overall business."
Largest Planned IPO Since Google has No Safety Net (WayTooHigh.com)
If you read into the AP story, it appears that Visa's IPO will now face calm waters. Hardly. Just look at their SEC filing and very clear risk factors that if [when] we are successful and prove our case that they illegally used their market power to conspire to fix prices, along with the triple damages, they could face "insolvency." The same is true for MasterCard as well. Can't get any clearer than that!
"Besides raising financial uncertainties, the case threatened to raise embarrassing questions about Visa's past business practices with a September trial date looming," said AP. Embarrassing?, just read the prior eight-hundred and one WayTooHigh.com postings! Overlooking our weak grasp of English and liberal rules of grammar, and you see something much more ominous.
Although Visa today did not acknowledge any wrongdoing, a first-grader would know that something must have happened as they prepare to hand out $2,250,000,000. Could you imagine if they DID do something wrong?!
According to the AP story, "American Express' three-year-old lawsuit painted an unflattering portrait of Visa, alleging the network operator conspired with some of its largest card issuers to thwart American Express' growth." So far, MasterCard's head remains in the sand. Everyone at the card association seems blind to the reality of our case, especially Sharon Gamsin, their PR and communications hack, who according to the same wire story said "MasterCard remains confident about its defense against the allegations." Sure. Since the same financial institutions which own and control Visa and gave the green light to settle, were also on the MasterCard and Visa boards for many years, what's the difference?
Getting back to that first-grader, even they would have to conclusively understand that MasterCard is next to recognize that the game is up.
"Before IPO, Visa Reaches a $2.25 Billion AmEx Antitrust Settlement" (Digital Transactions)
[commentary: WayTooHigh.com, via AP news story]
Tuesday, November 06, 2007
"JPMorgan Chase Calls It: 'A Lump of Coal' - We Call It: More Bait &-Switch Banking Gimmicks (WayTooHigh.com)
More tricks by the card associations and its member banks. As we near the holiday retail selling season, our business, along with millions of other retailers are again being faced with more gimmicks and schemes to force consumers to use their debit cards as credit cards. Even though the funds are instantly withdrawn from their bank accounts, the interchange fees are much, much higher, and that is how the "contest" games. Through contests and bait-and-switch-like small-print rules, cardholders can only enter the fun if they do not use the less expensive PIN-based debit card electronic payment.
We received the below letter today. But, first, as a refresher on how these games are played, see the below links to prior WayTooHigh.com postings. Even JPMorgan Chase® has a sense of humor as it sticks its tongue in the face of all its merchant customers. In the bank's own words from their Nov 1st press release: "(For this promotion, PIN purchases qualify only for a lump of coal)."
Look at What Visa® is Up to Now (WayTooHigh.com)
Confusing Debit Cards (WayTooHigh.com)
Who Is The Real Violator? (WayTooHigh.com)
Dear Mitch Goldstone:
JPMorgan Chase (one of the named defendants in your antitrust litigation, and the biggest bank in my area with a 17% market share) has came up with a sneaky new way to switch people over from cheaper PIN debit transactions to more expensive signature transactions this holiday season, forcing merchants to pay higher fees in the process (just when they need it the least).
The promotion, named "Chase Picks Up The Tab" (which runs until December 31) goes like this: Every 500th Chase Visa Check Card purchase from all enrolled Chase checking customers who reside within the promotional area is paid for by Chase (up to $500, and if the purchase is less than $5, the payoff is $5)... Chase will be giving out an estimated 50,000 purchases. But PIN-based purchases are not eligible among the "qualifying purchases".
Way to go, Chase! You just made merchants furious!
And how will this be paid for? Interchange profits, of course... instead of merchants paying 25-50 cents for PIN debit, they'll have to pay that 1.8+% signature debit fee, so this should be called "Merchants Pick Up The Tab (In Higher Interchange Fees)". And customers will want to sign because of this promotion... so what will be the bottom-line hit to merchants in areas with large amounts of Chase checking customers, and what will be the payoff to Chase (and Visa Inc.)? You can bet on one thing: It won't be pocket change for either.
P.S.: Don't forget that JPMorgan Chase also owns over half of one of the three largest Visa/MasterCard processors (Chase Paymentech), so the payoff to JPMorgan Chase could be even bigger at some merchants. Any wonder why JPMorgan Chase is doing better than Citigroup or Wells Fargo?
We received the below letter today. But, first, as a refresher on how these games are played, see the below links to prior WayTooHigh.com postings. Even JPMorgan Chase® has a sense of humor as it sticks its tongue in the face of all its merchant customers. In the bank's own words from their Nov 1st press release: "(For this promotion, PIN purchases qualify only for a lump of coal)."
Look at What Visa® is Up to Now (WayTooHigh.com)
Confusing Debit Cards (WayTooHigh.com)
Who Is The Real Violator? (WayTooHigh.com)
WayTooHigh.com Reader Comment
Dear Mitch Goldstone:
JPMorgan Chase (one of the named defendants in your antitrust litigation, and the biggest bank in my area with a 17% market share) has came up with a sneaky new way to switch people over from cheaper PIN debit transactions to more expensive signature transactions this holiday season, forcing merchants to pay higher fees in the process (just when they need it the least).
The promotion, named "Chase Picks Up The Tab" (which runs until December 31) goes like this: Every 500th Chase Visa Check Card purchase from all enrolled Chase checking customers who reside within the promotional area is paid for by Chase (up to $500, and if the purchase is less than $5, the payoff is $5)... Chase will be giving out an estimated 50,000 purchases. But PIN-based purchases are not eligible among the "qualifying purchases".
Way to go, Chase! You just made merchants furious!
And how will this be paid for? Interchange profits, of course... instead of merchants paying 25-50 cents for PIN debit, they'll have to pay that 1.8+% signature debit fee, so this should be called "Merchants Pick Up The Tab (In Higher Interchange Fees)". And customers will want to sign because of this promotion... so what will be the bottom-line hit to merchants in areas with large amounts of Chase checking customers, and what will be the payoff to Chase (and Visa Inc.)? You can bet on one thing: It won't be pocket change for either.
P.S.: Don't forget that JPMorgan Chase also owns over half of one of the three largest Visa/MasterCard processors (Chase Paymentech), so the payoff to JPMorgan Chase could be even bigger at some merchants. Any wonder why JPMorgan Chase is doing better than Citigroup or Wells Fargo?
Monday, November 05, 2007
The Banks Misguided Fee Adventure (WayTooHigh.com)
Citigroup Inc.®* deflected its attention from prudent financial management and instead became greedy.
This Reuter's picture of CitiGroup's leaving Charles Prince is "price-less."
Look back at the bank sponsored bankruptcy reform law of 2005; it made clearing consumer debt much harder. Fewer people were able to file for Chapter 7 protection, which was aimed to add further stability and protections for the financial institutions. Or, was it just a another sweetheart deal from Washington to its hefty campaign contributors and lobbyists? It helped the credit card industry and handed them billions of dollars while debtors had to pay back these "loans." The "Bankruptcy Abuse Prevention and Consumer Protection Act" was little more than a payoff to the banks. Read more.
While the credit card associations and its member banks were cheering, they lost sight of a much bigger storm - sub prime loans that enabled people earning just $40,000 annually to "buy" $800,000 homes and others to with few assets to flip homes. They became little more than renters who were teased with low or no upfront down payments and no income verification requirements.
This Reuter's picture of CitiGroup's leaving Charles Prince is "price-less."
Anatomy of Greed
Look back at the bank sponsored bankruptcy reform law of 2005; it made clearing consumer debt much harder. Fewer people were able to file for Chapter 7 protection, which was aimed to add further stability and protections for the financial institutions. Or, was it just a another sweetheart deal from Washington to its hefty campaign contributors and lobbyists? It helped the credit card industry and handed them billions of dollars while debtors had to pay back these "loans." The "Bankruptcy Abuse Prevention and Consumer Protection Act" was little more than a payoff to the banks. Read more.
While the credit card associations and its member banks were cheering, they lost sight of a much bigger storm - sub prime loans that enabled people earning just $40,000 annually to "buy" $800,000 homes and others to with few assets to flip homes. They became little more than renters who were teased with low or no upfront down payments and no income verification requirements.
Once the intoxicating, phony interest-only mortgages turned into a devilish nightmare, the banks lost billions. It just cost Charles Prince, Citigroup's CEO his job. But, it already ruined millions of dreams and destroyed lives, except for the few with titanium "golden parachutes." Click here for Reuter's update.
Reuters is reporting that "Citigroup may write off $11 billion of sub prime mortgage losses, on top of a $6.5 billion write-down last quarter." Even MasterCard, had set aside $650,000,000 to help cover its legal liabilities.
Reuters is reporting that "Citigroup may write off $11 billion of sub prime mortgage losses, on top of a $6.5 billion write-down last quarter." Even MasterCard, had set aside $650,000,000 to help cover its legal liabilities.
Where is the leadership? Where is the ethics? Rather than covering these huge losses, the inexpensive solution was to not to be greedy in the first place.
The new must-read manual for the banking executives are a new edition topic of: The Idiots Guide To Common Sense, and especially The Idiots Guide To Understanding the Sherman Antitrust Act.
Barron's has a feature profile (Nov 4) on MasterCard® that explains more, including what it asserts is the card association's "low balling earnings indications."
Today, the thousands of banks, which control[ed] MasterCard and own Visa® were thought to have more greed than even the oil companies. The "Bankruptcy Abuse Protection" scheme was wrought with one-sided greed. Now, the mortgage collapse faces similar greed. Both cost billions to address and the newest round, the ongoing misguided fee adventure with anti-competitive merchant interchange rates can become the banks' newest way to squander billions more.
Interchange fees are no longer cost-based - only about 13% of interchange fee costs are used to cover its transaction costs. Along with Visa and MasterCard, the banks too are being accused by us and members of the class action of market power to illegally fix prices. With all their other leaking dikes, a new round of billion-dollar floods is unpreventable and they could again turn to wield their unbridled greed by raiding their interchange cash cow, raising rates and causing more hardship.
The banks rich piggy bank are interchange fees - a $40 billion annual hidden tax on the economy. They schemed in their misadventure to dump their legal liabilities by selling off part of MasterCard on the public. Now a much larger IPO is on the horizon to do the same with Visa. Washington and our economy should take notice. Like with MasterCard, Visa is warning that they too could face insolvency if our litigation is successful.
With the loss of leadership jobs at Merill Lynch and Citigroup and many newly homeless customers in defaults and billions in existing fiscal mismanagement, we urge our readers to prepare for the next economic bail out. This time, it is not about mismanagement, but monumental greed. The new looming concern are those corporate chieftains who are looking more Al Capone-like as a modern day "untouchable" symbol of the collapse of law and order. But, don't look for the banks to be robbing themselves to cover their misadventures; interchange fees are their hedge that we must all be very worried about.
Today, the thousands of banks, which control[ed] MasterCard and own Visa® were thought to have more greed than even the oil companies. The "Bankruptcy Abuse Protection" scheme was wrought with one-sided greed. Now, the mortgage collapse faces similar greed. Both cost billions to address and the newest round, the ongoing misguided fee adventure with anti-competitive merchant interchange rates can become the banks' newest way to squander billions more.
Interchange fees are no longer cost-based - only about 13% of interchange fee costs are used to cover its transaction costs. Along with Visa and MasterCard, the banks too are being accused by us and members of the class action of market power to illegally fix prices. With all their other leaking dikes, a new round of billion-dollar floods is unpreventable and they could again turn to wield their unbridled greed by raiding their interchange cash cow, raising rates and causing more hardship.
The banks rich piggy bank are interchange fees - a $40 billion annual hidden tax on the economy. They schemed in their misadventure to dump their legal liabilities by selling off part of MasterCard on the public. Now a much larger IPO is on the horizon to do the same with Visa. Washington and our economy should take notice. Like with MasterCard, Visa is warning that they too could face insolvency if our litigation is successful.
With the loss of leadership jobs at Merill Lynch and Citigroup and many newly homeless customers in defaults and billions in existing fiscal mismanagement, we urge our readers to prepare for the next economic bail out. This time, it is not about mismanagement, but monumental greed. The new looming concern are those corporate chieftains who are looking more Al Capone-like as a modern day "untouchable" symbol of the collapse of law and order. But, don't look for the banks to be robbing themselves to cover their misadventures; interchange fees are their hedge that we must all be very worried about.
*[Citi is is a named defendant in our merchant antitrust litigation]
Background Links
"Visa's IPO Use of Proceeds Plan and Interchange Overview (commentary, WayTooHigh.com)
Consolidated Amendment to Class Action Complaint (WayTooHigh.com)
Letter to Judge John Gleeson, Re Challenge to MasterCard's Stock Reclassification (WayTooHigh.com)
[commentary: WayTooHigh.com]
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