AmEx Cleared to Become Commercial Bank

Credit card company can now accept deposits, access emergency Fed funds
By Rob Quinn,  Newser Staff
Posted Nov 11, 2008 2:09 AM CST
Ben Bernanke poses in the board room of Federal Reserve headquarters. The Fed has approved American Express' request to become a bank holding company.   (AP Photo/Manuel Balce Ceneta)
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(Newser) – The Fed has given credit card giant American Express the all-clear to become a bank holding company in a bid to keep the financial crisis wolves from the door, Marketwatch reports. AmEx can now accept deposits and access the Fed's emergency lending facilities. The central bank waived the normal 30-day waiting period, citing the "unusual and exigent circumstances affecting the financial markets.” 

The surprise move by American Express follows the announcement last month that it's laying off 10% of its workforce after a 24% plunge in third-quarter profits. The change in status brings American Express much needed relief but also opens it up to much tighter scrutiny from the Fed, and analysts believe it indicates that the firm is in far more trouble than it has let on. The company currently operates a small bank and a savings and loan, which have $50 billion in assets