A veteran credit card executive said major structural changes in the industry are making it less profitable.

During a presentation Monday in New York, Richard Vague, a member of the dissident slate that the activist shareholder William Ackman has nominated to Target Corp.'s board, said trends have "been towards higher capital requirements … lower margins because of increased competition, and now, more recently, a lot of attention from regulators and legislators."

In December, regulators adopted sweeping restrictions on credit card practices that are due to go into effect in mid-2010. Legislation moving through Congress with the backing of President Obama could toughen the new rules, give them the force of law and advance their implementation.

"They're going to decrease the flexibility in that business," said Vague, who co-founded the credit card companies First USA (now a part of JPMorgan Chase & Co.) and Juniper Financial Corp. (now a part of Barclays PLC). "I think it's not the place to be creating wealth for shareholders that it once was."

Ackman's Pershing Square Capital Management LP owns 3.3% of Target and options that could raise the stake to 7.8%. During the presentation, he pressed his argument that the Minneapolis retailer should fully unload the credit and funding risk for its credit card receivables through a partnership with a large financial institution. (Target sold a stake in its portfolio to JPMorgan Chase last year.) But Ackman said the current environment has made the prospects for a deal uncertain.

"The world has changed a lot since we originally spoke to them," he said. It is "not clear what kind of credit partnership transaction can be devised."

Vague said, "It could very well be that now is not the time to do something on credit cards. I don't have the particulars of Target's situation. But you would like a situation where margins or credit trends are more stable, where the universe of buyers has increased because the capital structure of the potential buyers is in better shape."

In a letter to American Banker Monday, Douglas Scovanner, Target's chief financial officer, wrote, "I firmly believe that Target will not quit the card business."

He also wrote that "we continue to aspire to reduce our current minority investment in this pool of assets."

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