The man who could arguably be called the catalyst for the Justice Department's antitrust lawsuit against Visa and MasterCard, Harvey Golub of American Express Co., took the stand for the government Wednesday and argued that if banks were allowed to work with his company, consumers who use credit cards could have lower interest rates.

Mr. Golub, chairman and chief executive officer of American Express, is not exactly the government's star witness - his deputy and hand-picked successor, Kenneth I. Chenault, who testified last week, had already covered the points the government was trying to prove, and seemed a more charismatic raconteur. But it was the soft-spoken Mr. Golub who opened Pandora's box four years ago when, in a keynote speech at a major credit card conference, he invited banks to become partners with American Express - a move that riled some of his colleagues, he revealed Wednesday.

American Express has worked with the Justice Department to boost the government's contention that Visa and MasterCard work closely together, to the detriment of the American public. Mr. Golub tried to make economic arguments that support this view.

Throughout the trial, lawyers for Visa and MasterCard have said that it might be good for banks to work with Amex - which charges higher rates to merchants that accept its cards - but bad for consumers, to whom the higher merchant costs could be passed.

But Mr. Golub said the higher rate merchants pay to accept Amex cards - known somewhat paradoxically in the cards world as the "discount rate" - would benefit both banks and consumers. As things stand, he said, people who revolve their bank card balances - and thus pay interest to their card issuer - effectively subsidize the people who pay their balances in full each month, who are less profitable customers for banks. If banks charged the higher merchant discount rate, Mr. Golub said, that income would subsidize the so-called convenience users. In turn, he said, banks could charge lower interest rates to the revolvers.

Echoing much of what Mr. Chenault, president and chief operating officer of Amex, told the court last week, Mr. Golub described his company's past mistakes and its realization that it needs banks to build up its market share. Specifically, Amex wants to tap into banks' customer databases.

"Amex would like to have access to bank balances, mortgage information, and information about a customer's standing in the community," Mr. Golub said.

He disputed the bank card associations' argument that Amex has the same access as banks to consumer mailboxes. Banks, he said, have privileged information about their customers. For example, he said, a person with a "thin credit file" would not appear on Amex's radar screen.

Mr. Golub described dissention within American Express over the decision in 1996 to open up the company's network to banks. Some dissenters - whom he did not identify - called it a "terrible idea" that would dilute the Amex brand and tarnish the company's upscale image, Mr. Golub said.

"Given the debate within the company, I thought I needed to communicate the decision [in such a way] that would not allow us to back out of this position," he said.

That led to Mr. Golub's now-infamous speech at a Faulkner & Gray-sponsored credit card conference in Atlanta in May 1996, when he publicly proclaimed Amex's desire to work with banks. The provocative invitation was his way of solidifying Amex's decision, he said.

The Amex dissenters had also been concerned that Amex's higher merchant discount rate would come under pressure by merchants, who would question why they should pay more for a card that was similar to a Visa or a MasterCard, he said. The average transaction on an Amex card is approximately 30% higher than a transaction made with a Visa or MasterCard card, he said, but this could change if Amex attracted the same customers as its competitors.

In testimony on a topic of gossipy interest, Mr. Golub said merger talks a few years ago between American Express and Citicorp had fallen through because Citi's then-chairman and CEO, John Reed, had wanted to acquire Amex rather than construct a merger of equals. Mr. Golub said Mr. Reed wanted to be CEO and to give Mr. Golub the titles of president and chief operating officer, and to designate him as Mr. Reed's successor. The dalliance only lasted about 24 hours, Mr. Golub said, before he rejected the idea. "It would have meant the demise of Amex," Mr. Golub said. [After that, Citicorp agreed to merge with Travelers Group, which became the dominant partner in the marriage.]

Mr. Golub said Amex also rejected the idea of a merger with Citi because it wanted to go forward with its bank partnership strategy, and Citi could have put a crimp in the plan. "Citi is viewed very negatively by banks because of its prowess as a competitor," Mr. Golub said. Moreover, "Citi would not have given Amex all the volume it wanted," Mr. Golub said in a deposition brought forth by MasterCard attorney James Egan.

Amex and MasterCard also flirted very, very briefly with a merger, according to the testimony. When Alex W. "Pete" Hart - who has already testified - was MasterCard president, he talked to Mr. Golub about American Express issuing cards through the MasterCard network, Mr. Golub said.

"Yes, you even had discussions about acquiring MasterCard," said Mr. Egan, the MasterCard lawyer.

Mr. Golub tried to minimize this. "Pete Hart was thinking about making MasterCard public. We never got beyond a sentence or two about acquiring MasterCard."

Mr. Egan said Amex wanted to funnel the high-end spenders to its own network, and to let the low-end customers remain on MasterCard's network. Mr. Golub denied that this was Amex's motivation. Mr. Egan said the collapse of the talks with MasterCard led Amex to the 1996 decision to open its network to banks.

The exchange between Mr. Egan and Mr. Golub was sarcastic and testy, with Mr. Golub acting confused about every question and acting as if he did not understand the lawyer. At one point, Mr. Egan gave up trying to explain himself, and said, "I don't want to fence with you, Mr. Golub; let's move on to the next question."

At another point, Mr. Golub poked at the trial lawyer: "You must have had fun these past two days preparing for this," he said.

Late in the day, the discussion turned to American Express' 1996 deal with National Westminster Bank and United Airlines to issue a cobranded credit card in the United States. GE Capital, a MasterCard issuer, had been on the verge of signing the United Airlines cobranding deal, and Amex was able to scuttle it.

According to American Express documents introduced at the trial, "United Airlines was in the final negotiation stages with GE Capital to launch a cobranded corporate card."

Another 1996 document said: "Amex's primary interest in winning this business is preventing airlines from cobranding with competitors."

Mr. Egan's point was that the Natwest/Amex deal prevented MasterCard from augmenting its corporate card program.

Mr. Golub confirmed Mr. Chenault's earlier assessment of the program. "The Natwest card in terms of volume it was not a success, but it was successful in preventing a deal with GE Capital," Mr. Golub said on the stand. "This [deal] was related to our corporate card strategy, not to our network deal strategy."

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