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With this morning's headline that AXP has requested $3.5 billion in federal aid,

Federal Aid suggests they are looking for a handout like say a third-world country. They are selling preference shares to the govt, similar to what banks have done. Amex relies heavily on credit markets to sell securities backed by credit card receivables and to sell short-term commercial paper. These markets have completely frozen. Amex is converting to a bank-holding company so that they can raise more funds from depositors and rely less on credit markets.

The downside is that they will now be regualted as a bank holding company and will need to increase capital ratios which would lead to a future ROE substantially less than the mid 30s that it had been achieving. Visa and MC business models are beginning to look a lot more attractive than Amex's.
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