Internet bank cancelling credit cards

[Gunit Hussein Sangh]

In London, but wonder how long it will be before this starts happening in the US. The bank was purchased by Citigroup.

http://news.yahoo.com/s/afp/20080203/wl_uk_afp/britainbankingconsumer;_ylt=AgWlNvWURQB3CuXzWnxr4MJvaA8F

LONDON (AFP) - Internet bank Egg has cancelled the credit cards of around 160,000 customers who have a "higher than acceptable risk profile".

Egg, which was bought by Citigroup last year, denied the move was linked to the global credit crunch and has faced an angry backlash from some of those whose cards will stop working in 35 days.

"Egg is very sorry that some customers are upset after receiving notification that it is ending their credit agreements," a spokesman for the firm said late Saturday.

"Egg has decided that it no longer wishes to offer credit to these customers, after conducting a one-off extensive review of its credit card book following the acquisition of Egg by Citi in May 2007."

Later in the article they reveal that at least one couple who paid their bill in full every month was also dropped.

[Vermouth]

This won't happen in the US, but it should.

[Gunit Hussein Sangh]

I think you need to add "yet" to that 

It's already happening in the home equity line of credit market:

http://www.jacksonville.com/tu-online/stories/020508/bus_243662563.shtml

(about halfway down)

Countrywide Financial Corp. recently sent letters to 122,000 customers telling them Countrywide was freezing their ability to draw from home equity lines of credit. According to a statement by Countrywide, the company focused on existing accounts where homes had fallen "significantly below" previous appraised values.

[Vermouth]

Wow, I'm impressed. So it seems there is a limit to the greed of these financial institutions? I thought for sure they'd ignore the concerns of investors, rake in all the cash they could, and just wait to get bailed out by the government. I must be missing something.

[SDML]

...and just wait to get bailed out by the government....

THAT'S IT!!!!

Remove the subsidies (including bail-outs) and companies are forced to think beyond the current quarterlies. Everyone rails against a totally (or even nearly) free market, but the problems always attributed to the market are not a result of a FREE market, but of the controls & subsidies that exist within the market.

Remove the government and you remove the problem.

[conley]

Wow, I'm impressed. So it seems there is a limit to the greed of these financial institutions? I thought for sure they'd ignore the concerns of investors, rake in all the cash they could, and just wait to get bailed out by the government. I must be missing something.

You are...there is no limit to their greed, and they are doing all of the above (raking in maximum cash, hoping to get bailed out, etc). This is capitalist society, for better or for worse. A government bailout, while it pisses me off, is almost certainly better than a worldwide depression. But better lending practices and credit control should be enforced to prevent a debacle like this from happening again.

sdml if you dont have some sort of government support for this collapse you are going to see some ugly ugly living...is it worth it to 'teach those bad bankers a lesson' ?? because if that happens every single american will suffer and suffer greatly