Spiegel - FCNB ANSWERS! READ IMMEDIATELY slow prossessing screwed others too Beaverton Oregon

READ IMPORTANT INFO ABOUT SPIEGEL AND FCNB

this may not solve our immediate problems but it looks like Spiegel and FCNB aren't getting GOING to get away with ripping us off!!!!!

SIDEBAR: People...if you use EFT (Electronic Funds Transfer) it is a legally recorded, online transmission of payment. I use PayPal (it's free) to pay my Spiegel Charge card payment, under Bill Pay (also, free thru PayPal).

I've NOT had any problems with them charging me a late fee using this method... cause the bastards can't lie about not getting your check. lol. But do know this... it will take at least 5 days in advance to get your payment to them by EFT, but it will be DEDUCTED OUT of your bank immediately when you hit the send button. USE IT. 2nd sidebar: According to the payoff rules, if you want to pay off your credit card and not get charged fees at the end of your 30 day wait to close, the PAY THE BILL 3 DAYS before the due date. NOW on w/the News article out of Beaverton, OR.

Regulators watch bank's closure

06/30/03

RYAN FRANK

BEAVERTON -- A Beaverton bank that once employed 1,000 people in Oregon is scheduled to shut its doors today under the close attention of federal and state regulators.

First Consumers National Bank, owned by bankrupt retailer Spiegel, managed 2 million credit cards for Spiegel's two retailers, Eddie Bauer and Newport News, and the company's catalogs as well as 740,000 MasterCard and Visa accounts.

The bank has laid off most of its employees but will keep a skeleton staff at its Beaverton headquarters to finish closing the operation, First Consumers' executives say.

Credit-card customers' growing unpaid bills and sagging retail sales caused Spiegel's tumble. The Downers Grove, Ill., company filed for Chapter 11 bankruptcy protection in March. Spiegel's stock closed Friday at 8 cents a share.

The bank employed more than 1,000 people at an Albany call center, its Beaverton headquarters, a payment processing center in Washington County's Bethany area and a Pennsylvania collections center.

Calls to the Beaverton headquarters last week were directed into an overflowing voice mailbox.

Though Oregon's May unemployment rate of 8.2 percent doesn't offer much promise, laid-off workers may find some opportunities in the finance sector, said Rebecca Nance Gamez, manager of the Oregon Employment Department's Beaverton office. The numbers of some clerical and finance jobs remained steady or showed slight gains from a year ago, state employment data show.

Credit cards issued by Spiegel accounted for nearly 41 percent of the retailer's fiscal 2001 sales of $2.8 billion. The company has not filed reports for its fiscal 2002.

Spiegel reported $40.5 million in losses in the third quarter of 2002, an increase from $12.3 million in the same period a year earlier.

The retailer has issued new retail credit cards through a contractor. Existing credit-card balances will be collected by a separate contractor.

As of Dec. 31, the bank's retail credit-card holders had a total balance of $1.9 billion, and MasterCard and Visa customers had charged $1.1 billion. Based on outstanding debt, First Consumers was the country's 26th largest credit card bank last year, according to industry newsletter The Nilson Report.

State investigators are keeping a close eye on First Consumers as it folds its operations. The Oregon Department of Justice has 54 open complaints against the bank. And the agency wants to make sure it refunds annual fees cardholders have paid for 2003.

First Consumers in March canceled its Visa and MasterCard accounts, many of which cardholders had paid the fee to use. The fees range from $60 to $70, said Jan Margosian, the agency's consumer information coordinator.

The company did not say how many cards it had issued at the time of the cancellation.

Cease-and-desist order The Office of the Comptroller of the Currency, a division of the U.S. Department of the Treasury, last year issued a strict cease-and-desist order limiting First Consumers' business.

If federal regulators don't force the bank to refund annual fees, the state Department of Justice may take action, Margosian said.

"We're just going to keep dogging them until they take care of the consumers," Margosian said. "We still are open to taking action on our own."

First Consumers, which opened in December 1988 with eight employees and 15 credit-card accounts, in recent years targeted much of its business to subprime borrowers.

The subprime market targets people with less-than-perfect credit ratings who are willing to pay higher interest rates. The market became profitable in the 1990s because more lower-income consumers had jobs and appreciated offers of credit, said David Robertson, publisher of The Nilson Report.

"They thought there was a certain percentage of customers that could be trusted with a credit card," he said.

The bank's business boomed in the 1990s. It reported $346 million in assets to the Federal Deposit Insurance Corp. in 2000, a 300 percent increase from eight years earlier.

But the surging economy cooled and the bank faltered after 2000. Many of the people who were happy to get credit in the late 1990s were out of jobs and unable to pay off credit-card balances.

"The economy softened, losses spiked, the scrutiny the regulators applied increased," said John Grund, a partner at First Annapolis Consulting in Maryland. "That left First Consumers National Bank between a rock and a hard place."

Assets erode The bank lost more than 40 percent of its assets in the next two years. The rate of charge-offs, the credit card debt that went uncollected, more than doubled to 15 percent in 2002. First Consumers' charge-off rate was about three times the industry's preferred level.

Slumping sales at Spiegel's retail outlets didn't help matters. New charges on First Consumers' cards plummeted in 2001 by 39 percent from the year before, according to The Nilson Report.

"They couldn't book new business to make up for how bad the bad business was running out the back door," Robertson said.

The climbing losses drew attention from federal regulators, too. As charge-offs increase, regulators require lenders to increase reserves to offset loan losses.

After the Office of the Comptroller of the Currency issued the cease-and-desist order, First Consumers reached a settlement with the regulator that required it to liquidate or sell its credit-card operations by April 30.

Spiegel, Robertson said, used the Beaverton bank to boost its bottom line while sales of sweaters, khakis and button-up shirts sunk.

But the strategy "was really self-defeating from the start," he said. "That's what happens when you are spiraling to bankruptcy. People make decisions that in retrospect seem like knucklehead things to do." Ryan Frank: 503-294-5955; ryanfrank@news.oregonian.com

Joni
Diamond Bar, California
U.S.A.

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