Purchase Bank Case

The merger of U.S. Citizen Bank and Louisiana Purchase Bank (LPB) in 1998 resulted in a formation of a financial powerhouse possessing core competencies in commercial lending and innovation. Upon recognizing the much needed annuity-driven market potential existing within the U.S. college population, the LPB pioneered the student credit card program in 1989. Indeed, the student credit card program proved to be more profitable with net income margin around 6 percent compared to that of 4 percent for non-student product offerings. In fact, LPB was collecting revenue on 60 percent of its accounts. The sheer magnitude of credit usage among college students caught public’s attention. Well respected college professors claimed direct correlation between
General Accounting Office (GAO) initiated an investigative report to further analyze the magnitude of student credit card usage and its consequences on students’ academic, financial, and personal well-being. The GAO asked LPB’s head of Student Card Services division, Michelle Jeffries, to participate in a survey soliciting data pertinent to their college student accounts as well as information regarding LPB’s marketing approach to this demographic. Data submitted would be compared to that of other (unnamed) financial institutions and published (in aggregate) without identifying individual responders. In addition, Michelle Jeffries was notified that a popular investigative television series, ’60 Minutes’ will be featuring a story on student credit cards and plans to portray credit card issuers in a negative light similar to that of tobacco companies. I believe Michelle is in the best position to be the key decision maker due to the fact that she has the most insight into divisional operations, objectives, and values. She is the leader of the student credit card services division and should be the one to decide and communicate next steps – after having gathered input from other constituents – including the President, Risk Manager and other
That begs the question of moral obligation and the ethics of extending credit to college students. Another important ethical issue is U.S. Citizen Bank’s response to the public in regards to the GAO survey as well as 60 Minutes. The bank is being asked to disclose confidential customer information as well as their business and marketing plans. Lastly, Michelle needs to marry her own personal values to those of the organization which she leads. She has a solid track record of being honest, fair and ethical and she needs to lead the organization keeping those core values in mind. Lastly, she needs to assure those shared values are actually being