AmEx approved to become bank holding company

[dipsydoodle]

Source: International Herald Tribune

WASHINGTON: The Federal Reserve has granted the request of credit card giant American Express Co. to become a bank holding company.

The Fed announced late Monday that it had approved the application for American Express and a related company, American Express Travel Related Services Co. Inc., to become bank holding companies.

The surprise announcement would give American Express access to low-cost financing from the Federal Reserve.

Read more: http://www.iht.com/articles/ap/2008/11/10/business/NA-U...

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Ready for a bail out ? That'll do nicely

[BR_Parkway]

1. WTF? a greedy corp taking advantage of a situation? who would

have ever guessed.

We need a Congress back in session to repeal all this shit - it's going for every thing except what it was supposed to do.

And frankly, it's BO who needs to be leading on this

[boomerbust]

2. Anticipation

Of the many credit card defaults that will be the next bubble to burst.

[L0oniX]

3. So since they are getting bailed out...do I have to keep paying them?

[morillon]

4. I think Amex is in trouble.

A family member works there, and layoffs are definitely on the way, they say. Some now, some in the second quarter.

And Amex is cutting people's flexible payment option OFF -- even people who've had cards for years and who've charged and regularly paid off $50K and up a year.

If Amex is this willing to piss off reliable customers, they are running scared.

[MilesColtrane]

5. Coming soon: Bank of Circuit City, First National General Motors, etc...

[FarCenter]

6. Banks will soon have to freeze credit card accounts

Credit Card Bond Sales at Zero, First Time Since 1993 (Update1)

By Sarah Mulholland -- http://www.bloomberg.com/apps/news?pid=20601109&sid=awS...

Nov. 5 (Bloomberg) -- Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, as investors shunned the debt amid the global credit freeze.

...

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Credit card issuers are not able to securitize credit card receivables and sell them on to investors. That means that they have to keep them on their books, and that in turn means that the banks have to raise capital to maintain their asset ratios and reserve against the steadily worsening losses on uncollectable credit card balances.

So when a Citibank gets $25 billion from the government, it doesn't necessarily increase or even maintain their ability to lend more than they have in the past.

As bonds backed by credit card receivables mature, and can't be replaced, the banks will have to reduce credit card receivables.

The same thing is happening with auto loans and student loans. The loan originators can't sell them on, and they can't keep them all on their own books while maintaining their capital ratios.