Oh, we’ve had such fun at Bank One’s expense in the year since the colossus came to town. Blunder after blunder has provided more pratfall amusements than a Three Stooges matinee.
But with Wednesday’s announcement that the bank’s earnings will fall even more than expected, it’s time to reassess. We’ve come to the point that we should not so much criticize Bank One as pity the lost souls.
Let Wall Street have its fun. Let jumpy analysts fan takeover rumors by asking, as one report Thursday did, “How much is that Bank One in the window?” (The guesstimate, by the way, is about $45 a share–25 percent less than the projected buyout price at the beginning of the year).
Let other Bank One-ologists speculate about the fate of CEO John McCoy. He has delivered two bad earnings surprises in three months, and got dealt a short hand in an executive-office shuffle. But less able executives have survived more drastic failures.
For much of this year, it seemed Bank One’s gaffes were little more than amusing, merger-related diversions.
We dubbed them Bank One-Fifty for charging customers of the old First Chicago $1.50 to use Bank One’s cash machines long after the two banks merged. Then, we caught them charging customers a buck-fifty for making deposits and balance inquiries on ATMs.
The bank’s Internet operation in May stopped half a million customers from getting to their money.
Undaunted, Bank One in June announced creation of a new all-Internet bank, WingspanBank.com. And so far, WingspanBank’s several dozen customers seem quite pleased with the e-bank’s very personalized service.
Then came the First USA troubles: Too few customers, too skinny margins, too aggressive marketing, too little internal dialogue about the magnitude of the problems at Bank One’s key operating unit.
We haven’t seen such a run of business breakdowns since Commonwealth Edison knocked out power to the Gold Coast and the Loop, all in one week.
And now, on top of it all, Bank One delivers another earnings surprise. Note to bank managers: When a second earnings shortfall cancels the analysts meeting called to explain the first shortfall, you’re in trouble.
Enough already.
The Bank One follies have reached a point of diminishing returns. Even the circus stinks if it stays in town too long. And everyone knows what happens if you take too many rides on the Tilt-A-Whirl.
Unfortunately for McCoy and Bank One’s shareholders, there is no simple or obvious cure.
The core of the problem lies at the First USA credit card unit. That’s the same operation assigned to handle the WingspanBank project, and the same operation assigned to handle Bank One’s home-equity loan business.
In other words, McCoy asked First USA to carry a heavier load than the one that blew out ComEd’s transformers last summer. And the man in charge, the aptly named Dick Vague, never did get a sharp view of the scope of the First USA problems.
McCoy couldn’t avoid canceling next week’s analysts meeting. Had he gone to Wall Street and tried to tap dance, they would have hammered him. As it was, investors over two days knocked down Bank One’s shares 10 percent.
McCoy is still trying to root out the source of Bank One’s problems. Vague may be gone, but no one at Bank One has anything but a vague idea of how deep the First USA problems may be.
“We need to make certain that all strategic options are given full consideration,” McCoy said Thursday from the safety of a prerecorded telephone message to analysts. “We need . . . more time to complete the work.”
He’s kidding no one. There’s no real strategic planning going on right now.
Bank One can’t begin deciding where it needs to go. First, it’s got to find out where it’s been.
