2008-11-10cnn.com

Seeking shelter amid a global credit crunch and consumer spending slowdown, American Express announced Monday it is becoming a bank.

The Federal Reserve, using emergency power to act swiftly, granted approval for AmEx and American Express Travel Related Services to become bank holding companies.

The move will give AmEx the ability to grow its deposits -- a more stable form of funding -- and provide it greater access to Fed funding and government rescue program.

...

The company currently operates a small bank, American Express Centurion Bank, as well as a savings and loan, American Express Bank, which together have just over $50 billion in assets and $14.4 billion in deposits. They offer mainly credit cards, loans and certificates of deposit, the company said.

...

AmEx is the third financial company to convert to a bank holding company since the global credit crunch heightened in mid-September. Goldman Sachs and Morgan Stanley, Wall Street's last two remaining stand-alone investment banks, converted to bank holding companies a week after Lehman Brothers filed for bankruptcy.

Brilliant! Now they can suck in more depositors, and swap out dodgy collateral to them and the Fed, instead of having to securitize them or hold them. It is very telling that no one in their right mind would want to buy AmEx's securitized consumer debt, and in fact, AmEx itself doesn't even want to hold the debt. So apparently in the general public (directly and via the Fed), they've found their greater fools.

When will GM and Chrysler get with the program and realize they need to become bank holding companies, and end this whole silly "debate" over whether they should be "bailed out"?


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