The New York Times
November 11, 2008
The Federal Reserve on Monday evening granted a request by American Express to become a bank holding company, giving it access to low-cost financing from the Fed.
The Fed said it had approved the application for American Express and a related company, American Express Travel Related Services, to become bank holding companies. The approval represented the latest reshaping of the financial services industry, which is undergoing its worst credit crisis in decades.
- A d v e r t i s e m e n t
In announcing the action, the Fed said “emergency conditions exist that justify expeditious action on this proposal.”
“Given the continued volatility in the financial markets,” said Kenneth I. Chenault, chief executive of American Express, “we want to be best-positioned to take advantage of the various programs the federal government has introduced or may introduce to support U.S. financial institutions.”
Mr. Chenault said in a statement that the decision to become a bank holding company would not fundamentally alter the company’s core focus on the credit card payments industry, nor would it require any significant divestitures of its operations.
The Fed’s approval for American Express was similar to the decision it made in September to transform the country’s two biggest investment banks, Goldman Sachs and Morgan Stanley, into bank holding companies.