Extra, Extra
Extra, Extra
Extra, Extra
Extra, Extra
Early Addition
Credit card company American Express was approved to be a bank holding company, allowing it to access government funds, yesterday. The Federal Reserver released a statement saying it waived the usual 30-day waiting period due to "the unusual and exigent circumstances affecting the financial markets." AmEx said it's taking almost twice as long for credit-card holders to repay loans--D.A. Davidson & Co.'s chief market strategist Frederic Dickson told Bloomberg News, "That business has totally dried up. If I were a shareholder, it wouldn't send a very warm and fuzzy message to me." AmEx, which recently announced it would cut 10% of its workforce (equaling about 7,000 jobs), joins Goldman Sachs and Morgan Stanley as companies who recently became bank holding companies.
American Express Becomes a Bank
add to digg
add to stumble upon
add to reddit
email this
add to facebook
add to del.icio.usComments (13) [rss]
Post a comment (Comment Policy)
Tips
Newsmap
Contribute
Latest Tip:
Boat lost power as it was coming in. 10 injuries so far (minor)
[more]
Can I become a bank too? I'd like to borrow 8 trillion please!
I'm no finance guru so I'll just assume the public is getting screwed somehow. That's what my taxpayer intuition tells me anyway and it's never wrong lately.
American Express should have never have gone into the business of giving out credit except maybe for their charge card customers, who are much less likely to default than their credit customers are. They're even turning their charge cards into quasi-credit cards by offering most purchases to be paid over time.
For a company that used to own Lehman Brothers, I'm not surprised by the difficulties they're having. Both companies seem to be run by people with the same mindset: To overextend themselves with no backing by deposits.
It's like free candy day in the business world. Wall Street, Detroit and now Amex?!
I know each individual person's credit card debt is their own responsibility, but there would be something extremely perverse about the government bailing out an industry that is by definition predatory.
Though Amex is a little different, at least they were until they started allowing their card holders to carry balances.
And the reason we can't let them file for bankruptcy is...????
This is a serious question. Don't we already have laws and processes for this?
And why no bailout for Circuit City?
the way my friend at Earnst & Young oversight tells me how this works is that these companies have dug so deep inside of the system that to let them fail would be a domino effect. basically they let Lehman die cause it was more responsible but it wasn't more ingrained than AIG who was really irresponsible but it was already in the roots. So in other words to kill the parasite would kill the host as well.
But since the FDIC is in effect "government insurance", why would a bank filing for bankruptcy be disastrous? Seems like all the people's $$$ would theoretically be covered. Not sure I understand the "chain effect" and no one seems to have a solid answer.
"that to let them fail would be a domino effect"
AmEx filing for chapter 11 would have a very limited effect on the ecnonomy. They are not "too big to fail."
- why not let these business behemoths go down the tube according to Darwin the way you or I would go down if we couldn't balance the checkbook - we are witnessing government of the people by overly greedy speculators for overly greedy speculators who are trying to convince us it is in our interest that they survive - politicians don't mind giving away incomprehensible amounts of money because it's not their money - to them it's monopoly money - now big business is figuring out how to cover itself when it does badly by coming like Frankenstein hands out to the government - big business has been running the country since the industrial revolution - it takes someone with vision and guts like Teddy Roosevelt or Woodrow Wilson or FDR to stand up to these guys and limit their power where it hurts the guy in the street - let's hope the new President understands the solution to this newest incarnation of the boom bubble bust syndrome lies in more regulation, not in handouts that will never reach hockey Mom - to start, he needs to draw his expert advice from somewhere other than former Democratic administrations and Wall street -
So when will AmEx start building branches all over the city?
I can't wait to open an account there...and then pull all of my money out at the end of each month.
Clearly at the taxpayer's expense. Your MASTERS have mandated and YOU SLAVE will have to fit the bill for them!
Now go to work and be a good little SLAVE, your MASTERS commands you!
ironically, AmEx used to have a bank division which it sold off last year, partially due to some trouble they ran into with the DOJ. ah, hindsight!