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Credit Card Companies Morph Into Banks for Bailout Funds

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moneybags3Bloomberg: American Express Co., the credit- card company that’s converting into a bank, will get $3.39 billion of fresh capital from the U.S. rescue fund to ensure its survival as the recession heads into a second year.

American Express joins more than 190 regional banks, commercial lenders, insurers and card issuers seeking at least $75 billion from the second phase of the Treasury’s bailout plan for financial firms. Faced with rising defaults by cardholders, the New York-based firm won Federal Reserve approval to become a commercial bank last month and announced in a statement today it gained access to the $700 billion Troubled Asset Relief Program.

“The ability to avail themselves of government funding takes the dire scenarios off the table,” said Richard Shane, an analyst at Jefferies & Co. in San Francisco. Shane, who initiated the shares with an “underperform” rating in November, said today he expects “significant losses” in the loan portfolio.

bspcommentWow… where does this end? I wonder how a problem caused in part by an excess of money is going to be solved with giving even more money to the companies that contributed to the current economy disaster unfolding before us because of their love of too much money? It’s time for the little guy’s turn. The bailout money should be trickling up not across and maybe down.

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Written by mattliving

December 24, 2008 at 10:26 am

Posted in Money, Politics

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