WASHINGTON – Financial services giant American Express won approval from the Federal Reserve to become a bank holding company.
The move will enable the firm to accept deposits and have access to capital through the government's troubled asset relief program.
Although the company has two banking units, the majority of its assets were not under federal supervision. Now that they are the firm is eligible to apply for federal funds designed to help troubled financial institutions.
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"Given the continued volatility in the financial markets, we want to be best positioned to take advantage of the various programs the federal government has introduced," American Express CEO Kenneth Chennault said in a statement. "We will continue to build a larger deposit base to broaden our funding sources."
The firm has reported profit declines during the last four consecutive quarters and experienced higher default rates on its credit cards. Its default rate on those cards was twice as large during the third quarter of this year as the same period last year.
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