Things Continue to Get Worse For Advanta
By Steven Gibbs
March 25, 2010
As it seemed as nothing else could happen to Advanta Bank Corp, it looks as things continue to get worse for the financial institution that was once labeled as the fifth largest issuer of small business credit cards. While in the past it was in the news for several reasons, it is now making headlines again as recent reports indicate that they have been seized by the state of Utah’s banking regulators.
When it comes to the company’s most recent troubles according to many experts there is no surprise that a seizure of the company was soon to follow its other woes. Not many times before (if at all) has this happened where government officials have not intervened. As for the exact reason of why and why now, in Advanta’s case according to a representative for the Utah Department of Financial Institutions, it was "found to be a in an unsafe and unsound condition" mainly because they were making substantial losses to their credit card portfolio by taking significant write-downs.
As Advanta has now been taken over by the state authorities, it has not been determined what will happen to a major class action lawsuit from once cardholders. The lawsuit itself stemmed from a settlement between the bank and FDIC over the “deceptive” business practices that were used to entice small business owners with no to low introductory rates only to have that rate skyrocket only after a substantial amount had been placed on the card for no reason.