robert.b.ferguson

American Express Calls Investment Banks' Bluff

American express (AXP) has a problem. You see they, unlike visa (V) or master card (MA), are actualy exposed to the debt they underwrite. Visa and Master Card only process credit card transactions on cards issued by banks. Many of the " super prime" debtors who are now in default or delinquent at AXP probably weren't as super prime as they led AXP to believe. Some were probably employed at institutions which have gone belly up (Bear sturns) or have cut personne (most other financials) leaving AXP holding the bag of bad debt. Most of the other financials who were exposed to subprime debt of all kinds have already experienced massive write downs and have had to raise capital thus diluting value which had already taken a beating for those holding shares befor the melt down. That is why I have been buying finacials at record lows with the intent of holding them until conditions warrent selling them three to five years from now and why I went long on the recent V IPO. As the manic said "This to shall pass.".