American Express drastically cut credit limits for businesses across the United States after the Federal Reserve granted Amex the right to become a bank holding company. Hundreds of businesses are now reporting that American Express is cutting credit limits dramatically, dropping more financial troubles on an already beleaguered businesses.

While many banks and lenders are carrying immense debts from bad mortgages and loans, American Express is in a panic. It is now rumored that over 60% of Amex's clients, including business who make their payments on time and enjoy long standing Amex Business Accounts are having their limits cut without explanation or cause.

One victim of this credit slashing is WPC Inc., a print service in Carlsbad California. This mid-sized company has offices in California and Texas and is weathering the recession quite well. CEO Alban West called Amex to find out why they've slashed his account. After an hour of bouncing between supervisors and associates, he gained no definitive answer to why his limit was cut, nor any way to have it reset.

"I simply don't understand. We spend roughly $12,000 a month on our Amex Account, we always pay on time and had a credit limit of $32,000. We've just been informed they're cutting our credit to $3500, after 15 years of loyal business. To make it worse, they're completely evasive on the phone. I can't get a straight answer why."

Joanna Fridinger, owner of a limo company in Baltimore is another victim of Amex's inability to honor its credit agreements. She was quoted in the LA Times after having her credit limit truncated from $19,500 to $1400.

"I was paying over and beyond what they even asked me and that was why I was so shocked that they did this," she said. "I thought, what the hell? I've been a good customer. Doesn't that mean anything?"

Today alone, a count of 700 newly published complaints from small and large business owners reveals an enormous problem. Companies using Amex in their daily operations can no longer afford to depend on this valuable convenience. Even those who are paying on time and creating jobs in this economy are not immune to the erratic limit cuts.

Amex's decision to cut so many contracts is a devastating blow to main street. Many businesses have relied on American Express for liquidity and secure transactions. Casual corporate transfers and daily operating payments are looking less likely for American Express, which will certainly cut into its bottom line as businesses switch to bank drafts and direct account transfers for a majority of their spending.
The Federal Reserve has granted Amex eligibility for the Federal Assets Relief Program, and with the current figures, it's almost certain that we'll see Amex in line for a handout on Capitol Hill. While taxpayers may offer some Relief to Amex's troubles, no relief is offered to the loyal customers hurt by these desperate credit cuts.