[statman]

I've literally done millions of them - with the full constent of OCC regulators. We had strategies installed in our automated systems that would reduce lines for customers that weren't using them. The line reductions didn't happen to all accounts, but they potentially could have - almost all accounts in a given portfolio were subject to them. As long as that was the case - that most cards fell into the automated decision engine - and that no credit data was used other than balance utilization & balance history, our regulators were perfectly fine with it. In fact they liked it. We could show that it curtailed instances of run-away credit for customers whose credit suddenly deteriorated. And we got their lines lowered before their credit actually got worse.

BTW - I think that another legal argument used in doing these without adverse action notification is that if we could show in each case that there were long periods where only a fraction of the line was used, that 1) this portion of the line was essentially 'inactive,' and also that by lowering the line to closer to what was actually used didn't inherently affect the status quo of the credit relationship. In other words, if a customer only ever used a maximum of $2000 of a $25000 line, and we dropped their line to $8000, we weren't really impacting their use of credit significantly. And we could show with hard data that if a customer with that credit behavior ever was to suddenly increase his use of credit dramatically, the probability of charge-off rose exponentially. Lowering lines was good for us and good for them.

Our lawyers said it was all kosher, and the OCC agreed. I'm sure they had opinion letters from everyone and their dog okaying the process. We didn't walk across the street without Legal's okay...