Following Morgan Stanley and Goldman Sachs, American Express converted to a bank holding company. This conversion puts American Express under Federal Reserve oversight, thus, making American Express regulated like other commercial banks in the finance industry. While the change of status puts American Express under more regulations, American Express had no choice as the current credit situation and increased credit card default left it short capital. With the conversion, American Express can borrow from the Fed, besides being able to secure more customer deposits, and participate in government bailout programs.
While American Express chose a jurisdiction with more regulation voluntarily, could this be a sign that the crisis is forcing companies to submit to regulatory jurisdiction that they otherwise would not want?
1 comment:
Wow, another giant wants to be a bank holding company. It seems like all the banks now try to throw away its "investment bank" status and stick w/ the government umbrella to gain consumer confidence...
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