Participants in a credit card industry initiative to stem the bankruptcy tide have clammed up, concerned they might be affected by the antitrust scrutiny that MasterCard and Visa are facing.
Launched earlier this year and touted as a collective solution to an increasingly expensive problem, the Bankruptcy Protection Peer Group has grown reluctant to call much attention to itself at a time when the bank- owned card associations are fighting allegations that their rules illegally restrain competition.
The peer group is so fearful its agenda will be misinterpreted that members are reluctant even to use the word alliance.
The initiative "is not a true alliance or formal structure," said Phil Davis, senior vice president of NationsBank Card Services, one of the bank card issuers spearheading the program. "It's just a group of banks that have adopted a similar stance."
That stance - if now understated - is that lenders need to be proactive in addressing the record number of personal-bankruptcy filings, expected to exceed one million this year.
Such collective action is not unusual. Lenders often work together in fraud prevention and consumer education, for example.
In the peer group, some of the larger credit card banks are concerned that they will attract unwanted attention from government authorities inquiring into whether some aspects of the card industry have become anticompetitive.
Mr. Davis, one of the few members willing to be interviewed, said some banks have considered dropping out because of "a fear of antitrust violations."
Indeed, the credit card field has become subject to a wave of litigiousness that bankers fear could lead to tighter regulation.
For several months, the Justice Department has been investigating the membership policies of Visa and MasterCard, driven by the contentions of American Express Co. and Dean Witter, Discover & Co. that the bank card groups cannot legally prevent their members from selling American Express and Dean Witter cards.
The federal investigation is also targeting the banks that sit on the card associations' boards.
More recently, Wal-Mart Stores Inc. and The Limited Inc. sued Visa, claiming the association illegally forces merchants to accept debit cards. Named as co-conspirators in that antitrust lawsuit are some 4,000 banks.
"It seems natural that people are concerned that the industry is under investigation," said Anita Boomstein, an attorney with Hughes, Hubbard & Reed in New York. But she said antitrust law is complex and often misunderstood by business people.
The Bankruptcy Prevention Peer Group, according to bankers associated with it, provides a forum to share ideas on how to cope with the problem.
The membership, including NationsBank Corp., MBNA Corp., Citicorp, First Union Corp., and Household International, has grown from about 12 to 25 since meetings began to be held in July.
The members come together once a month in a teleconference, which is sponsored by a different bank each time.
"We look at trends, credit counseling services, and how we can promote education," said Maj. Gen. George Miller, president of Armed Forces Benefit Association Industrial Bank in Colorado Springs.
Many of the banks in the program also have in-house bankruptcy units that counsel customers about bankruptcy and ways to avoid it, often warning them of bankruptcy's less desirable ramifications. The banks also provide telephone numbers of other banks in the alliance when it is disclosed that a customer has their credit cards.
NationsBank spokeswoman Jamie Pickrell said the potential antitrust hazard "takes energy away from the group when energy has to be put into communicating that the purpose of the group is to share best practices."
"I don't know how a legislator could look at the (alliance) negatively," said Charlie Albright, Household's chief credit officer.
"Give us some credit for trying to work with the consumer," he said. "A year ago we would have played hardball and told them to pay or else."
