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American Express Co. reportedly is seeking $3.5 billion to $3.8 billion in capital from the federal government's Troubled Asset Relief Fund. AmEx declined to confirm the reports, but a company spokesperson tells CardLine that becoming a bank holding company offers AmEx the most flexibility during the current economic crisis. "At a time of major change in the financial markets, it's very important that we stay flexible and have a broad array of options available to us, both to provide additional liquidity to our business in the short term and to position us for growth over the longer term," the spokesperson said. AmEx reported a worldwide charge-off rate of 5.7% of managed receivables during the third quarter ended Sept. 30, up 250 basis points from 3.2% during the same period a year earlier (CardLine, 10/21). Separately, Treasury Secretary Henry Paulson today said the government's $700 billion bailout plan is changing gears. Under the latest plan, the government will not buy troubled mortgage assets from banks. Instead, the Treasury will buy stakes in banks to encourage them to resume normal lending. Paulson also said he also hopes to make bailout funds available to nonbank lenders including issuers of credit card, auto and student loans. Capital One Financial Corp. previously confirmed it is seeking $3.55 billion in funds from the government, along with approximately 50 other financial firms. Most institutions have until Nov. 14 to apply for the funds.
