Ahead of the Bell: American Express seeks $3.5B: Financial News - Yahoo! Finance: "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. American Express is also facing a slowdown in the broader economy, which has led to more customers missing payments and cutting back on spending, hurting the company's profitability."
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Well, of course. Why shouldn't the federal taxpayers "invest" in American Express? Their venture into peddling securitized credit card debt has proven to be a mistake, and we taxpayers are supposed to insure them against business risks. Along with the auto industry. And the banks. And the insurance companies. And the states. And the cities.