American Express Profit Drops 37% on More Borrower Defaults

[Purveyor]

July 21 (Bloomberg) -- American Express Co., the biggest U.S. credit-card company by purchases, withdrew its 2008 earnings forecast after second-quarter profit fell 37 percent on worse-than-expected consumer defaults. The shares slumped 11 percent in extended trading.

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``By almost any measure, the U.S. economy and business environment are much weaker than the assumptions'' the company had in January, Chief Executive Officer Kenneth Chenault said today in a conference call. ``Unemployment rates took the largest jump in over twenty years. Home prices declined at the fastest rate in decades and consumer confidence is at one of its all-time low points.''

The U.S. economic slowdown worsened in June, affecting even American Express's wealthier cardholders with high credit scores, Chenault, 57, said in the call. Late and uncollectible loans were higher than expectations in the quarter and will rise as the year progresses, Chenault said. The U.S. lost 62,000 jobs in June, the sixth straight period of shrinking payrolls.

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``We are seeing very affluent people who have had historically very, very strong spending history with us cutting back,'' Chenault said.



BLOOMBERG: www.bloomberg.com/apps/news?pid=20601103&sid=aWEPaboP3lHg&refer=us

[whistle]

1. Even the wealthiest card holders are defaulting

[Captain Angry]

2. I wonder how many are trying to dump their debt onto somebody else.

As the old saying goes, you don't get rich by signing checks.

[PassingFair]

3. How's that bankruptcy bill working out for them.

Love me some credit card "reform"!

:sarcasm:

[Purveyor]

5. Paging Sen. Biden...Paging Sen. Biden!!! eom lol

[Doctor Cynic]

4. Don't Leave Home With It.