Overwhelmed American Express sells its soul

News that American Express has agreed to greater federal regulation in exchange for access to federal bailout funds is a typical good news, bad news situation. The good news, of course, is that AmEx likely will not implode and disappear like so many of its competitors in the financial services industry -- some with names as well-known as Lehman Brothers. But there's also the bad news. Selling its soul for government intervention cannot be seen as anything other than a total capitulation on the part of AmEx, long a titan of the capitalist system. "Given the continued volatility in the financial markets, we want to be best positioned to take advantage of the various programs the federal government has introduced or may introduce to support U.S. financial institutions," AmEx Chief Executive Kenneth Chenault said today, two weeks after the company's announcement of 7,000 layoffs, according to CNN. The independent credit card issuer operates a small bank, American Express Centurion Bank, and a savings and loan, American Express Bank, which have a combined $50 billion in assets and $14.4 billion in deposits. But AmEx depended on bundling its credit card debts and selling them as securities, an idea that now seems laughable. If some of your loans are risky, how can more of the same loans be less risky? AmEx is the third financial company to convert to a bank holding company since September, joining Goldman Sachs and Morgan Stanley.