American Express seeking $3.5 billion as part of government

[dbackjon]

American Express Co. is seeking $3.5 billion in funds under the government's plan to directly invest in financial firms, according to a Wednesday report in The Wall Street Journal citing unnamed sources.

Earlier this week, American Express received approval from the Federal Reserve to become a bank holding company, which is a similar structure to traditional commercial banks. The credit card company now has access to financing from the Fed and the ability to grow a large deposit base.

The increased funding opportunities through government programs, including the potential $3.5 billion investment, could be a huge boost to American Express as one of its primary sources of funding has nearly disappeared amid the ongoing credit crisis.

American Express relied on packaging pools of credit card debt and selling them to investors in the securitization market. As investors have shied away from purchasing all but the safest forms of debt, the market for credit card-backed securities has dwindled.

http://biz.yahoo.com/ap/081112/american ... .html?.v=1

[lifesapuntreturn]

Yup, that's the way the game is played now.

First, Goldman Sachs and Morgan Stanley, who were never commercial banks but always investment banks, were approved literally overnight by the feds to change their bank charters from investment banks to commercial banks so they could access the federal bailout money. That opened up the floodgates.

Now American Express is in on the game. GMAC, the financing arm of GM (or at least they used to be part of GM before GM sold 51% of GMAC to a private equity firm a few years ago to raise cash), will be playing that game soon. Then Ford Motor Credit and Chrysler Credit will be right behind them. It will be another gimmick to "save" the Big 3 automakers.

If AmEx can be a bank, why not Visa? And Mastercard? And if credit card companies can become banks, why not retailers who also issue credit cards e.g Penneys, Sears, etc. And if some retailers can become banks, why not all of them? Think WalMart National Bank (they have been trying for years to obtain a bank charter but the feds kept saying 'no'. You can bet they will be at the front of the line now and if the feds say 'no' again they will sue the feds claiming unfair competition.) Then you'll have the KMart National Bank, then Home Depot National Bank, then Safeway National Bank, then Office Depot National Bank, etc. etc. etc.

Before long, individuals will be able to become a national bank. The feds could save a lot of time and just declare every company and individual to be their own national bank. I'm thinking Lifesapuntreturn National Bank. Send me bailout money, feds - how about we start with $10 million and see how that goes? If I need more, I'll let you know.

[Ibanez]

First business' wanted to keep government out, now they NEED the gov't!

[AZGrizFan]

American Express Co. is seeking $3.5 billion in funds under the government's plan to directly invest in financial firms, according to a Wednesday report in The Wall Street Journal citing unnamed sources.

Earlier this week, American Express received approval from the Federal Reserve to become a bank holding company, which is a similar structure to traditional commercial banks. The credit card company now has access to financing from the Fed and the ability to grow a large deposit base.

The increased funding opportunities through government programs, including the potential $3.5 billion investment, could be a huge boost to American Express as one of its primary sources of funding has nearly disappeared amid the ongoing credit crisis.

American Express relied on packaging pools of credit card debt and selling them to investors in the securitization market. As investors have shied away from purchasing all but the safest forms of debt, the market for credit card-backed securities has dwindled.

http://biz.yahoo.com/ap/081112/american ... .html?.v=1

And this is what happens once the government trough is opened up. Turns out we didn't have to worry about Obama converting the country to socialism. Bush beat him to it.