GLG News by Credit Card Experts

Duncan MacDonaldConsultantDuncan McDonald

Are the lawsuits against Toyota a blessing in disguise?

March 15, 2010

Analysis of:Lawyers Vie for Lead Roles in Toyota Lawsuits | online.wsj.com

The article is about the pending consolidation of the scores of lawsuits filed against Toyota across the US related to its sudden acceleration problem. The key aim of the plaintiffs' lawyers is to ensure that a favorable court is chosen to try the consolidated case. That is, a court that will have a favorable judge and a jury the lawyers can manipulate, and that will support certification of the case on a class basis. Toyota's lawyers will want the opposite, except perhaps on the class issue.

Duncan MacDonaldConsultantDuncan McDonald

Trial of price fixing suit threatens bankcard interchange lawsuit

January 14, 2010

Analysis of:Recorded Music Price-Fixing Suit Reinstated | online.wsj.com

The 2nd Circuit Court of Appeals has ordered a trial of a price fixing lawsuit involving two music industry joint ventures. The case is important to the bankcard industry because it is facing a multi-billion dollar antitrust class action over the interchange prices Visa and MasterCard (each a joint venture) impose on merchants that accept their cards. That case is also under the jurisdiction of the 2nd Circuit.

Duncan MacDonaldConsultantDuncan McDonald

NFL Supreme Court case should worry bankcard networks

January 14, 2010

Analysis of:Supreme Court Skeptical of N.F.L.'s Antitrust Claim - NYTimes.com | www.nytimes.com

The issue yesterday before the US Supreme Court was whether the National Football League should be treated as a "single entity" for antitrust purposes. The outcome would determine how far a joint venture like the NFL can go in limiting member business practices, e.g., via exclusive dealing arrangements. Prior to their IPOs, Visa and MasterCard were JVs that set interchange pricing that has been challenged in an antitrust lawsuit.

Duncan MacDonaldConsultantDuncan McDonald

Visa's Image-making: Marketing or Legal Defense?

December 30, 2009

Analysis of:Visa's Image Overhaul - US Banker Article | www.americanbanker.com

The article notes that Visa's new ads are the first of their kind since its IPO 2 years ago. Their goal is to influence the outcome of the interchange wars with its merchants (before Congress and in court) and to cause public and private sector VIPs to recognize that it is not an issuer of bad old credit cards. The ads do not state why it took Visa so long to put on a better face.

Duncan MacDonaldConsultantDuncan McDonald

Is federal banking preemption a benefit or trap for banks?

December 11, 2009

Analysis of:House Deal Bolsters Defense of Preemption - American Banker Article | www.americanbanker.com

The banking reform bill in Congress will include a provision to almost totally preempt the application of state law to federally chartered banks, like Chase, Wells, Citi, et al. Its sponsors have offered it to soften banking resistance to other parts of the bill (e.g., the creation of a super-consumer protection agency). Preemption protects banks from balkanization by patchworks of conflicting and overlapping state statures. As such, it allows for greater cost predictability.

Duncan MacDonaldConsultantDuncan McDonald

What GAO card study means to interchange legislation & NY lawsuit.

November 20, 2009

Analysis of:GAO: Let Card-Fee System Stand | online.wsj.com

The GAO study of bankcard interchange fees is a mixed bag for the industry. It upholds the practice (in contradiction to the lawsuit against the practice in New York) but points to numerous ideas about how its excesses can be reduced. The latter could propel the Welsh bill in Congress toward enactment. It would allow merchant actions to pressure issuers to accept lower interchange fees. The study's ideas could also play a role in crafting a settlement of the NY suit.

Duncan MacDonaldConsultantDuncan McDonald

Populist Politics Threaten Card Industry Recovery & Survival

November 19, 2009

Analysis of:US Credit Card Sector Faces Punitive Hostility | www.ft.com

The letter in today's FT (I am one of the authors) questions whether new and proposed legislation by Congress can kill the credit card industry.

Duncan MacDonaldConsultantDuncan McDonald

Retail discounts won't revive our economy

November 9, 2009

Analysis of:Catering to the Recession Mentality | online.wsj.com

The article is about the struggle of retailers to lure consumers to stop worrying about the economy and start spending again. Their bait is aggressive discounting. The question not only is whether it will work but whether other factors will wipe out the best laid discounts.

Duncan MacDonaldConsultantDuncan McDonald

Loss of arbitration of cardholder disputes could sink card industry

October 15, 2009

Analysis of:Turmoil in Arbitration Empire Upends Credit-Card Disputes | online.wsj.com

Although the article is about an investor's failed bet on arbitration of card disputes, the bigger fail will belong to the card industry -- the 1 billion bank and private label cards held by 200 million consumers. Issuers of those cards have all but lost the right require arbitration and the enormous protection arbitration brings against class actions. With the NAF gone kaput and the AAA refusing to fill the void, issuers now face massive, potentially crippling new risks .

Duncan MacDonaldConsultantDuncan McDonald

Threats to make CARD Act worse and to regulate interchange fees

October 6, 2009

Analysis of:Banks Face Pressure to Bend on New Agency - American Banker Article | www.americanbanker.com

The article is about the wrangling in Congress to enact a so-called "Consumer Protection Agency." But it carries a threat to bankers. If they don't stop trying to block a CPA, Congress will enact piecemeal bills that will prevent card issuers from being able to reprice in response to the CARD Act and will regulate interchange pricing downward.

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