Fed says yes to American Express

The Federal Reserve on Monday granted a request by American Express Co. to become a bank holding company, opening the door for the credit card giant to accept deposits and permanently access financing from the Fed.

The Fed said it had approved the application for American Express and a related company, American Express Travel Related Services Co. Inc., to become bank holding companies.

The approval represented the latest reshaping of the financial services industry, which is undergoing its worst credit crisis in decades.

The Fed’s approval for American Express was similar to the decision it made in September to transform the country’s two biggest investment banks, Goldman Sachs Group Inc. and Morgan Stanley, into bank holding companies.

American Express last month reported that its profit fell 24 percent in the third quarter as cardholders restrained their spending and had more trouble paying off debt.

The New York-based company has reported four straight quarters of profit declines as a rising number of consumers struggle to pay off debt and reduce spending in the face of a worsening economic downturn.