American Express to Convert To Bank Holding Company
The Federal Reserve yesterday granted a request by American Express to become a bank holding company, opening the door for the credit card giant to accept deposits and permanently access financing from the Fed.</br></br>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."</br></br>The Fed's approval for American Express and American Express Travel Related Services was similar to a decision it made in September to transform the country's two biggest investment banks, Goldman Sachs Group and Morgan Stanley, into bank holding companies.</br></br>That move bolstered the two institutions after the collapse of Lehman Brothers, the largest bankruptcy filing in U.S. history.</br></br>Like American Express, Goldman and Morgan Stanley gained the ability to borrow federal money and build a base of deposits in an effort to reassure investors and other banks.