* New card law “more negative than positive” for company
* Customers who need credit might find it harder to get
* American Express shares fall 3.3 percent
By Jonathan Stempel
NEW YORK, May 20 (Reuters) - American Express Co (AXP.N) Chief Executive Kenneth Chenault said a new law that would impose sweeping limits on credit card issuers will likely hurt his company and reduce the flow of credit to consumers.
Chenault said the legislation will be “more negative than positive” for American Express, because it will make it more difficult for the credit card and travel services company to set rates based on the risk its customers pose.
“At the end of the day, to be perfectly honest, it’s more negative than positive,” Chenault said Wednesday on a conference call hosted by Calyon Securities. “We will be hurt less than our competitors because 80 percent of our revenues are generated from fees.”
The House of Representatives on Wednesday voted overwhelmingly to approve credit card reform legislation adopted a day earlier by the Senate. [ID:nN20453226]
The bill would curtail card issuers’ ability to raise rates, and to assess fees on such things as late payments and overdrafts, which critics consider unfair, onerous or hidden.
The White House said President Barack Obama would sign the bill into law on Friday. Card issuers say the legislation could raise costs and reduce perks, including for creditworthy customers whom the legislation is intended to help.
Chenault said: “My concern is from the standpoint of credit being available, to particularly consumers who need it.”
He added that deposit gathering ”will be a core element“ of American Express’ growth strategy,” although Chenault professed to have “zero interest” in becoming a full-service bank, including through a merger.
On Monday, American Express set plans to cut 4,000 jobs, or 6 percent of its workforce, to help save $800 million by year end. The plan is on top of an October restructuring that included 7,000 job cuts and $1.8 billion of potential savings.
American Express hopes to soon repay the $3.4 billion it took from the government’s Troubled Asset Relief Program.
Shares of American Express closed Wednesday down 3.3 percent at $23.98 on the New York Stock Exchange. The company is part of the Dow Jones industrial average .DJI. (Reporting by Jonathan Stempel; Additional reporting by Kevin Drawbaugh in Washington, D.C.; Editing by Tim Dobbyn)