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American Express Co.'s card billings in recent months have stopped declining as sharply as in previous quarters, but it is too soon to say the economy is recovering, AmEx CEO Kenneth Chenault said this week. During an interview broadcast yesterday on cable-TV network CNBC from Sun Valley, Idaho, Chenault spoke broadly about AmEx and the credit card industry. "(AmEx has come) off a double-digit decline. ... To have several months of stability and billings I think is encouraging, but I wouldn't characterize it as a recovery," he said. Chenault said he hopes to see further signs of economic recovery in mid-2010. Credit card charge-offs continue to rise for AmEx and other card issuers, he noted, adding that the economic downturn's effect on spending in the affluent sector also has hurt AmEx. Asked whether AmEx is considering purchasing any other credit card brands or portfolios from companies including Citigroup Inc. or General Electric Co., Chenault said "it would have to be if the economics were attractive, it would have to be a high-end, co-branded product, but not a private-label (card brand)." Regarding new credit card laws passed last May that go into effect next year, Chenault said the credit card industry "needed to be reformed," especially in areas of "back-end pricing" and "certain types of fees," but that in some ways the legislation went too far. One example, he said, were limitations on risk-based pricing. "We live in a dynamic environment. If someone's financial situation changes dramatically and you don't have the flexibility of price, what's going to happen? The very people who need credit will not be able to obtain it at the same level, and it will be more expensive," Chenault said. Unlike most credit card issuers, some 80% of AmEx's revenues come from card (transaction) fees, he added, noting he believes that "some card companies will have difficulty" coping with the new constraints on risk-based pricing.
