Earlier today I wrote an article on WalletPop.com about the ever-growing bailouts being handed out by the federal government. Specifically, I’m a little ticked off by the AIG bailout, which was at $85 million about a month ago, and now sits at $150 billion. (Yes, that’s almost double.)
I suggested that the insurance industry and credit card companies would soon be asking for bailouts of their own.
But news late this afternoon may mean that the credit card companies don’t have to ask for bailouts after all! All they have to do is pretend to be banks! The Wall Street Journal reports that American Express (yes, the credit card company) has gotten approval from the Federal Reserve to become a bank holding company. That means they have immediate access to the $700 billion TARP (bailout) program.
Last week AmEx reported quarterly profits were down, and they were trimming about 10% of their employees (7,000 of them). The company also reported a $1.4 billion charge for credit losses, with larger charges expected in the next two quarters.
Plan on seeing Visa, MasterCard, and Discover asking to be pretend banks too. They’d be fools not to try it and have a chance at getting their hands on some federal money.