I’ve spent a fair amount of time on this blog taking potshots at credit card companies.  Let’s be honest, that’s pretty easy to do when the card issuers are jacking up rates and seemingly arbitrarily cutting credit lines at Mach II.  It’s not hard to criticize the banks when they’re sucking up bailout funds and simultaneously punishing their historically responsible customers.  Hey, they’re an easy target.

In the interest of fairness, I thought I might take a few minutes to consider the other side of the story.  Maybe this crazed cash grab is a real necessity because times are just as tough for those card issuers as they are for the consumers toting their plastic around.

News from the world of Citi points in that direction.  The card giant just announced plans to hand out pink slips to 100 employees in their credit card division.  Maybe things are tough out there in lender land, after all.

According to the online Wall Street Journal:

“These actions are difficult for everyone involved,” said Samuel Wang, a Citigroup spokesman, in a statement. “For Citi Cards, this is part of implementing a new organizational model to better prepare the business against current economic and regulatory conditions and to capitalize on future opportunities to serve customers,” he said. “For Citi Personal Wealth Management, this is part of a strategic shift to focus qualified financial advisers located in Citibank branches on providing more fee-based, investment advisory services.”

Yes, you could argue that they’re using the specter of upcoming “regulatory conditions” as an excuse to gouge folks, but could there be some merit to the argument that current economic conditions are making the world of consumer lending so tough that all of the seemingly crazed consumer beat-downs we’ve seen necessary for industry survival?

Market Watch recently noted that many of the rate increases/acts of near-usury are a pre-emptive measure to pile up the dough before the CARD act reigns in card issuers.  However, they also argue that prevailing economic conditions are a primary driver of the activity:

The American Bankers Association agreed that some higher rates are being pushed ahead of February, but said the embattled economy that is leaving issuers with boatloads of unpaid, unsecured debt is the real driver of such huge interest-rate increase.

“We have to take into account the losses in the credit-card space,” said Peter Garuccio, ABA spokesman.

As much as some of us might like to place all of the blame for recent rate-boosting on pure greed and a willingness to gouge regular Joes and Janes without a scintilla of conscience, there’s some prima facie appeal to the argument.  CNN Money reminds us that Moody projects continued losses for the card industry “through next year” and that they may clock in at the 12% rate.  Those big unemployment numbers mean more deliquencies and chargeoffs, after all.

So, maybe it isn’t easy being mean.  Maybe the card companies just don’t have a choice but to smack the rest of us around with variable rate cards, unpredictable credit limit adjustments, new annual fees and other adjustments.  Maybe we should all take a moment to feel sorry for those guys, huh?

Well, I’m not ready to shed a single tear for them.  Here’s why.

First, unlike the people who are paying those new rates, these guys got a nice cash infusion courtesy of Uncle Sam to cushion the recessionary blow.

Second, the problems they may be experiencing are, to a large degree, self-inflicted.  As the WSJ article mentioned above noted, Citi’s problems stemmed from their involvement with some fo the practices that created the down economy.  To wit:  “The company has been walloped the past several quarters by its exposure to some of the exotic securities that were at the heart of the credit crunch as well as souring consumer loans.

Third, dirty pool is dirty pool–no matter where and why you’re playing it.  It’s one thing to tighten up and to make adjustments.  It’s another to do it in a mad flurry of activity in order to skirt upcoming regulations and it’s unbecoming to do it when the people on the receiving end are suffering considerably more than the fat cats making the calls.

Finally, even if it’s understandable, it’s not that smart.  I think David Ellis’ report at CNN Money makes a very good point–and you can put me in the “some analysts” groups on this one.  Yeah, so much for a balanced look at the other side of the issue, but when you see companies squeezing every penny out of your customer base as quickly as they possibly can, it’s not hard to believe that their engaged in self-defeating activity:

Some analysts are arguing that those aggressive initiatives are doing more harm than good though.

With Americans up in arms, lawmakers have considered moving up the implementation of the CARD Act to December 1 or implementing a rate freeze until the new legislation takes effect.

At the same time, experts contend that sweeping interest rate increases are putting greater strain on the same consumers that are struggling to stay current on their bills — and hurting card issuers as a result.