Julie Forster reports from Minneapolis on Metris.
The company finds itself in this precarious position partly because of the economy but also because of a decision that was made in 2001 to extend the credit limits of the company’s most profitable customers. Just after the credit limits were extended, other lenders, including Target and Sears, came out with their own credit cards and aggressively pursued customers, many of whom added debt from their new cards in addition to expanding their Metris balances. Then came the Sept. 11 terrorist attacks in 2001, and the sudden contraction of the economy, a phenomenon that always hits highly indebted borrowers hardest. “On Sept. 12, our payments stopped,” said Matt Melius, executive vice president for credit risk management.