« on: September 01, 2006, 04:14:06 AM »
MBNA and Bank of America (BofA) already merged. The $35 billion deal creates a combined financial giant with 20% of the U.S. credit card market. Both companies have a track record of lending practices that harm consumers. Bank of America has a strikingly disparate lending record and is extensively involved in subprime lending. MBNA's record of mortgage lending is questionable, and has a history of spending heavily to influence federal legislation that will increase its own profits at consumers' expense.
The two companies and their employees have given federal candidates and parties nearly $22 million over the past 15 years — making a merged BofA-MBNA America's top corporate contributor. BofA made more than 2.4 million in campaign contributions last year. In 2004, MBNA surpassed Enron as the single largest donor to George W. Bush. MBNA showered millions on federal candidates (more than 1.5 million in 2004 alone) as it took a leading role lobbying for bankruptcy "reform" -- legislation passed by Congress and signed by Bush on April 20, 2005 that will make it much harder for consumers to file for bankruptcy.
MBNA is one of the more aggressive enforcers of "risk-based repricing" or "universal default" contracts, in which a credit card lender scans consumer credit reports frequently and raises interest rates on existing balances if it doesn't like what it sees. If something as small as an unexpected doctor's bill goes unpaid, or a consumer's overall debt load goes up, it can mean huge changes in a consumer's financial picture. In one case an MBNA customer's credit card payments shot up from $100 per month to $300 per month when MBNA decided that it didn't like other factors in the consumer's credit picture -- despite the fact that the consumer had never gone over her limit or been late with payments.
Driven by consumer anguish, a few legislators have begun to look more closely at banning this practice. Across the big pond, the U.K's Office of Fair Trade has begun an investigation of MBNA's European affiliate, looking into what it calls "alleged unfair contract terms" and studying how it establishes late, overlimit and returned check fees.
Customers who call to complain about the practice have said that they frequently encounter rude, confrontational customer support staff who seldom use their discretion to lower rates to anything like previous levels. Even if they do work things out with MBNA staffers, complainants say, in some cases agreements change from day to day depending on who they speak with at any given point.