Word: robinsons
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Dates: during 1990-1999
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Many Amex customers, though accustomed to paying in full each month, proved much less disciplined in their approach to the Optima card. "We thought we had better demographics and experience with our customers," says James Robinson, Amex's chairman, who defended the company's assumptions. "Either our hypothesis was wrong or we didn't manage it right." But Robinson believes that external factors, most notably the current recession, hit Amex's clientele especially hard. "We had models for dealing with tough times but not for a white-collar recession. The model wasn't tested for hurricanes...
...control the damage, Robinson put bearlike Amex president Harvey Golub in direct charge of the Travel Related Services division, which includes card operations. Golub, known for his expertise on the ski slopes and in the kitchen, had been boss of one of Amex's few star performers, IDS Financial Services. To cut losses in the credit-card business, Golub plans a top-to- bottom overhaul at a cost of $110 million, which will include laying off 1,700 workers. Among other goals, Golub plans to boost the growth of Amex cards in force. Among the possible incentives: waiving...
...Optima affair, with its whiff of a cover-up, raises many unsettling questions about what top executives knew, and when. Robinson, for instance, concedes that he wasn't made aware of the problems at Optima until a month or so ago, a point that raised eyebrows throughout the industry. Says a high- ranking executive at a rival credit-card company: "I heard rumors about Optima's losses a year ago. Something's wrong when competitors knew before American Express senior executives did. If James Robinson didn't know, he should have...
...outside capital. Warren Buffett, the Omaha-based billionaire who serves as interim caretaker at Salomon Brothers, stepped in with a $300 million investment. The company has also recognized that its managers have to adjust to an economic slowdown that may last for the better part of the 1990s. Says Robinson: "Management has to be able to deal with good times and bad. It's easier in good times, but we can't always operate in an environment that's friendly...
...Robinson strongly denies that the company ever set out to be all things to all people, to become a true financial supermarket. Amex has always seen itself as more of a niche player, an upscale specialist. But Robinson concedes that his financial empire might have overreached in its scope. "This has been a time of tremendous turmoil and change," he says. "We've had problems along the way, but we've gone and fixed them." Robinson may not have fully repaired Amex just yet, but the company seems to have finally come to grips with the likelihood that the current...