WASHINGTON (AP) - The Federal Reserve on Monday granted a request by American Express Co. to become a bank holding company, opening the door for the credit card giant to access 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 Co. Inc., 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.
In announcing the action, the Fed cited "emergency conditions."
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 Group Inc. and Morgan Stanley, into bank holding companies.
That move bolstered the two institutions after the collapse of Lehman Brothers, which became the largest bankruptcy filing in U.S. history. Goldman and Morgan Stanley gained the ability to borrow federal money and build a stable base of deposits in hopes of reassuring investors and other banks.
AmEx last month reported that its profit fell 24 percent in the third quarter as cardholders restrained their spending and had more trouble paying off debt.
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