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American Express Re-Structures, Requests Bailout Money

Written by admin - 2 Comments

American Express (AXP) sure is having a rough time. It’s so bad, in fact, that they’ve decided to re-organize such that they can qualify for help under the economic bailout plan. Under their former business model, they packaged credit card debt into bonds which were then sold to institutions seeking income-generating investments.

This structure has helped shield Amex from delinquencies while still receiving the lion’s share of the merchant fees. Unfortunately, the market for credit card-backed securities has dried up, leaving Amex with more debt than they can easily manage.

As a result of all of this, Amex has asked the Federal Reserve for permission to become a “bank holding company,” which qualifies them for help under the economic bailout. According to reports, they’re seeking a $3.5 billion investment under the terms of the bailout plan. Perhaps this is why they’ve been reducing credit limits so aggressively.

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Published on November 13th, 2008 - 2 Comments
Filed under: Credit Card News

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Comments (scroll down to add your own):

  1. Hmmm….. :-/

    Comment by Eric N. — Nov 13th 2008 @ 5:05 pm
  2. WATCH YOUR NEW STATEMENT – Hikes to % I canceled my Small Biz Delta Platinum in Q1 of this year. I received my second card’s statement today (Blue Personal). I have a balance and the account is active. Statement date of 11/06/2008. I notice the instructions See Page 5 For A Notice Of Changes To Your Account. Please See Page 6 For A Notice Of Changes To Your Account.

    I called to decline the new rate.

    Page 5 wasn’t applicable. Page 6 hiked the rate 3% as of 12/02/2008 (next billing cycle). The CSR was American or sounded as such. He was, however, unable to find the statement I was looking directly at — reading the fine print of Page 6, last line. I noticed that Page 3 is actually printed with “September 1, 2008 – September 30, 2008 — which is Membership Rewards. The statement had the same serial number on all 3 pages of the statement.

    He went off the phone a couple of times to “check on things”. The second time, on hold for five minutes and he disconnected the call.

    I called again at 7:45 p.m. 7:49 Mind you, I started this at 7:00 p.m.
    The second CSR’s name was Fritzo – I was placed on hold at 7:51 p.m. My decline of the new terms of the Cardholder Agreement were to be

    “Submitted in writing to the following address:
    American Express General Counsel Office
    1801 North West 66th Avenue – Suite 103
    Mail Code: 95-01-16
    Plantation, FL 33313

    It took TWO CRS nearly and HOUR to provide a Cardmember what they have the LEGAL RIGHT to decline. And they made it as long and hard as possible. So you think twice, Warren, if you want to keep your hefty investment into a Company that is deceptive and purposely hides that text in unsuspecting places — hoping and praying that stupid Cardmember doesn’t look at the statement and see those two lines and waste an hour of their Friday evening to do what every Cardmember should do: DECLINE THE NEW RATE BY PUTTING IT IN THE SNAIL MAIL

    IF YOU ARE ASKING FOR $3.52b and then I’m taxed on it and then you cu the limit, mess with FICO, now attempt to RAISE the APR… that calls for action.

    Comment by Cancel It Now — Nov 15th 2008 @ 12:45 pm

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