The late 1990’s was a boom period for banks. This was the decade that truly introduced “credit card companies”, otherwise known as monoline issuers. Essentially, all they did was issue credit cards whereas previously credit cards were seen as a benefit to having your business with a specific credit union or bank. CapitalOne, MBNA, and Providian are the best known. These banks grew to prominence by satisfying a previously untapped market: the subprime or less credit worthy market. It was working. They were making fistloads of money from people struggling to pay bills.

Unfortunately for the monoline issuers, 2001 and later saw some very concerning periods of subprime charge off and loses that literally destrpyed some issuers like Metris and NextCard. Essentially, these issuers over lent to risky customers and when they coulnd’t pay up anymore the issuer had to be liable for the debt and did not have enough capital, or money set aside, to satisfy the bad debt and had to fold. Furthermore, CapitalOne and Providian also saw elevated levels of charge offs. Thus, in cane the regulators - Office of the Comptroller of the Currency (OCC). They required a shift in portfolio so that monoline issuers are required to have a substantial size of balances from Superprime or low risk customers. Then came time for monolines to go head to head with traditional banks such as Chase, Citibank, and Bank of America.

As such, we come to the consolidation era of today. MBNA was acquired by BoA. Providian was broken up and sold to various banks. Household was acquired by HSBC. Only CapitalOne stand strong and is actually buying banks such as North Fork and Hiberion from Katrina devastated New Orleans.

Why am I telling you all this? Really, I do not know. The first paragraph began as an intro to an entry I was attempting to brief you on how banks develop offers to inactive customers but apparently I digressed. Look forward to the original entry I planned shortly.

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