Bailout Expands: American Express to Become Bank Holding Company
The U.S. Federal Reserve continues to use the $700 billion it was granted to bail out financial institutions in trouble. This time, it is American Express who can count on the government’s help.
The Fed granted a request by American Express to become a bank holding company. This gives it access to the low-cost financing from the Fed.
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.”
Meanwhile, automakers and especially General Motors are calling on the U.S. government to bail them out as well. General Motors said it would run out of cash in the first half of 2009, after reporting a massive $2.5 billion loss in the third quarter of 2008.
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I wanted you to know that I am OUTRAGED that the government has now recognized cash-strapped American Express as a “bank”, which will enable them to have access to taxpayer bail-out monies!
American Express already had some of their operations in the banking industry with their Centurion Bank division, and I do not feel the remainder of their company should have been allowed to become a “bank” just to rescue the impending crisis in their charge-card division!
They themselves are responsible for their very-own situation when they began to lower credit-limits on virtually all American account holders, knowingly causing credit/debt ratios to fall, knowingly resulting in lower credit scores, which allowed them to raise interest rates on millions of consumers, helping to fuel the financial crisis we all now face!
American Express has shown blatant predatory practices towards us Americans and American businesses, and now they are rewarded by this recognition as a “bank” only to obtain bail-out monies from our taxes!
When are these insults to us ordinary “Joe The Plumber” types going to end?
This is more then an OUTRAGE this is ROBBERY, American Express for the last few years has only encouraged its cardholders to assume more and more of their day to day expenses, everything from gas, groceries, utilites, to paying all sorts of vendors that the average business pays monthly and NOW they want to lower your limits, remember NO PRESET LIMIT, well lowering your limit is no longer a preset limit and they have the nerve to charge you for a platinum card!! Well who ever has a card should no longer use it, everyone has rewards and tell A/E to stick it were the sun does not shine. I for one send $100, 000 a year and I am going to take my business else where. And they want a bail out the goverment should let them sink as they are doing the same to their customers with no regard to their past predatorial practices. Also remember this is a charge card not a credit card, the balances are paid off in FULL every month. American Express does not want to work with their customers because now they want you to pay within 10 days of the due date not before the statement drops and if you are running a business with payments being made to all creditors at a certain time every month then having American Express cut off your line because they will not give you the float that you have had for 17 years it is a slap in the face and if I could I would slap Mr.Chenult in the face with my platinum card. What about his executive bonuses he will still receive with TAX PAYERS MONIES?
I certainly cannot agree with either comment above. Face it, American Express – like any Mortgage company – did not sign your name on the dotted line acknowledging the debt. American Express did not shop for the goods, they did not fill their tank with gas. And they did not pull the card out of the wallet.
I don’t necessarily mind loan guarantees for the auto makers. But I do not support sending billions to auto makers so they can develop hybrid vehicles.
@Scott Chris
Re: “When are these insults to us ordinary “Joe The Plumber” types going to end?”
In my skeptical view of things, not until they get their A…s kicked Royally not unlike the British did in 1776 when they couldn’t devise enough clever schemes by the dozen (stamp duty on private transactions etc.) to sucker the public for revenue. Let’s face it, this industry is just another tax on the working public, ensuring that you are working for them in some proportion or another every day for the rest of your life.
Same BS happened to an otherwise quite affluent Flight Instructor/Charter Jet Pilot friend of mine. It all started with AmEx and and it had a snowball effect culminating in a short 6-8 month period. He used to charge sometimes in the a amounts of tens of thousands of dollars for aviation fuel, landing fees, hotels, cars etc. throughout his otherwise no spending limit AmEx crads, reaping the “rewards” of points and miles etc. He was getting reimbursed for these costs he laid out in full, within 6-8 weeks by his clients. Well DID AmEx pull a fast one on him. They lowered his otherwise non existent limit without any prior warning or communication by thousands of dollars BELOW the then outstanding balance, causing all the associated over the limet etc. BS fees. My friend being an otherwise old school type fellow, promptly refused to pay these and held back payment until they agree to reverse the BS charges. Well, they never did. What’s more they kept adding delinquent fees etc. and jacked up 30+ % interest charges. Well, needless to say his credit score that was pretty much catching up on almost 800 took a spiraling-down nosedive, no aviation pun intended. About a month or two later his other creditors wised up and jumped on the bandwagon to pull an AmEx on him. He used to fly for Lehman Bros. on a contract. We all know what happened to them. So he is still out holding the bag on that account and right now he is in bankruptcy proceedings. I have known him for the better of the past 15 years. He is the annoyingly meticulous, punctual guy who doesn’t even jump in and start driving his new Audi A8 in the morning before doing a “pre-drive checklist” on it. After the TV character I keep calling him “Monk” for this. I know he has never been delinquent or late with ANY of his obligations up to this point, for the past decade and a half I have known him. He just refuses to pay up for a legalized shake down and give up the remainder of his earnings to a legal extortion racket. He rather suffers the effects of a bankruptcy and meantime frantically searches for new jobs even in 3rd world places like India, Malaysia etc. as the domestic airline industry as well as private aviation have all but 100% halted any hiring for the foreseeable future.
Punchline:
I just opened my AmEx mail today. They are putting a $1,000 limit on my previously limitless GOLD (!) Rewards Card. That is $1,000 altogether for all three cards associated with this account. I usually charge around $2,500 a month on it and pay in full when due on time. Thanks God as of now I only owe $600+ on it. But it makes it seem that the credit line is 60+ % utilized. So, Jeez, I wonder what happens next. Especially to my 760 credit score. Do they really expect me to fess up $185 in annual fees for this remarkable product of theirs? Do I really need the work and aggravation associated with a GOLD (!) Card with a $333.33 credit limit per card?! They gotta be freakin’ joking! Outside the US some single foreign currency notes have much higher value than this and they have no problem making change for it at the cashiers without stirring up a bogus anti-money-laundering security BS! They should have just gone the Lehman Bros. way! But yet, another dinosaur is kept on limitless taxpayer life support as a public pet. I just wonder what happens when the taxpayer cannot cough up any more revenue “limitlessly”. Especially, how the job market and real wages are performing these days.
Regards,
Winston
This response is for “Interested” who argued the fact tah we signed the dotted line. Here is a true scenario for you.
Me and my wife have a American exress card that is still under promotional 12 mo no interest and making minimum payments. We got this initially to replace her damaged computer. Over the past 8mo’s we have had auto troubles and charged those as well. For illustrations sake I’ll say we have a credit line of 7,000 and have a balance of 4,300 and intend pay off this balance prior to accruing any interest on this amount. At the end of December we were notified that due to a late payment our promotional was canceled we were charged a $38 late fee and our credit limit was dropped to 4,500 making the card appear nearly maxed out.
This would have been acceptable if we had been late on our payment. The perceived late payment was AMEX’s own doing as it had mis applied the december payment to november. Because we were responsible customers and paid consistently early we were penalized for their blunder. We called had the late fee corrected the promotional reinstated but the would not reinstate the credit limit. So our credit is negatively impaced as a result. It is not a matter of needing the credit or planing to us it. It is a matter of principal. we played by the rules so we got burned. It is not a Joe the plummer condtion. It is a plague of greed that has swept over this nation from the government who reaches further into our pockets(we are their bosses. When was the last time u demanded your boss pay you more) yearly. To the big business with the nameless and replaceable employees, the Greedy Ceo’s, And the upper class who cannot conceive of having to scrape by. This problem will not stop there it will spreads down into the lower class as we have less and less to work with. I leave you with this thought. For the government, for the creditors, for the greedy, we the lower class are their feet. If you cripple your feet you cannot walk. This economy and government will buckle under its own weight and fall if the issue of economic greed continues.
I agree with those above frustrated with their AMEX card-holding experience. From day one I’ve had nothing but trouble with the cards I’ve held. I cannot list the issues I’ve had with the lofty AMEX corp. Name it – it’s happened. I use the card and they get suspicious and shut it down for three weeks while they “investigate” the card usage. I did nothing weird or odd just used it to purchase our monthly items and then paid the card off at the end of the month. You’d think that would create good relations – nope. That was about three years back. I never did get a good reason for the full scale “investigation” on me. Meanwhile, after the cards usage was returned to me every other day it was declined even though I owed nothing… Now over four years of paying before the due date – a fabulous credit score of 740 they dumped my credit amount from 5000 to 1000 overnight. They tossed me off a letter stating it was because I didn’t use the card often enough. Of course I didn’t… to be honest I never knew when some saleslady was going to tell me the card was denied. I’m paying off the $122 I owe and cutting this baby up. It is a waste of my time and energy. I’ve actually found the whole issue funny from a card I could never depend upon from day one. I recall the time I actually went shopping and only took along my AMEX blue to help regulate my spending. I had to have my husband drive 80 miles with good old American cash to rescue me because even though I did not owe one thin dime on the card it was denied at four gas stations. When I got home and contacted them after a forty minute wait on hold I got an “I’m sorry.” Oh please… they are so lame! This is the only card where a credit limit is meaningless since it seems to work about 50% of the time. This does not even cover the VAST number of establishments that won’t even honor the card. The very idea of bailing them out when they have never bailed me out frustrates me more than I can say. They are happily losing my business for life.