American Express Company received approval earlier this week 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.
AmEx which is being hit by slowing consumer spending and rising defaults, is seeking roughly $3.5 billion in taxpayer-funded capital from the federal government, according to people familiar with the situation.
The card issuer is the latest company not directly hit by the housing crisis to request cash from the federal government. While retailers, car companies and others hit by the slowdown in consumer spending haven’t gotten the government money, financial firms of all varieties are, in fact, getting federal bailouts.
At some point, perhaps, a portion of the initial $300 billion of the $700 billion (now $100 billion) in bailout money will go to some entity or individuals who will actually use it to strengthen the economy, rather than to banks and bank holding companies who continue to just “cling” to it instead of putting it back into the economy.
As a fiscal conservative, I lean toward hand-ups to help with isolated shortfalls rather than toward hand-outs which tend to encourage ongoing dependence. In light of how quickly the first $300 billion of taxpayer bailout money has been distributed (without accountability) to numerous (new) banks, though, Obama’s pledges of free-for-all hand-outs to the middle and lower classes … which we must be entitled to simply because we breathe air … is starting to sound appealing. Let’s put the “me” in aMErica. 🙂 What say you?
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