First USA official quits amid woes

Credit-card industry

October 20, 1999|By KNIGHT RIDDER/TRIBUNE

Richard W. Vague, the Texas lender who built Wilmington, Del.'s First USA Bank into the biggest credit-card company in the world, has quit in the wake of disappointing earnings and a consumer revolt.

First USA's owner, Chicago-based Bank One Corp., said Vague quit "to pursue other interests." Chairman John B. McCoy said it was Vague's decision.

The resignation was announced late yesterday, after Bank One's disclosure that its third-quarter earnings dropped because First USA posted flat profit instead of the rapid growth it had previously projected.

McCoy predicted First USA would recover: "I'd buy it again today."

Bank One stock has lost more than 40 percent of its value since August, when McCoy and Vague admitted First USA was losing market share to its rivals, in part because of an aggressive and unprofitable fee structure and the practice of farming out some customer services to cut-rate outside contractors.

The bank's policies provoked a surge of customer complaints, class action lawsuits and congressional calls for an investigation; in response, First USA promised to retract some fees and improve customer service, and to focus more on second mortgages and other noncredit-card loans.

Bank One stock closed Tuesday at $32.88, down 38 cents per share.

Vague, the head of the credit-card division, was the second top First USA official to quit in recent months. Former President Randy Cristofferson left in July to join Walker Digital, the Stamford, Conn., business-development company whose billionaire founder, Jay Walker, is best known for launching Priceline.com and other Web businesses.

Vague's departure was an abrupt reversal for an executive who as recently as this past summer was named by American Banker as a likely successor to McCoy.

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