Discover Financial Services, the fourth-largest credit-card network, won approval to become a bank holding company, joining American Express Co. and other financial firms in a rush for government funds and retail deposits.
The Federal Reserve approved the credit-card company’s conversion, according to a regulatory filing today. The change may make Riverwoods, Illinois-based Discover eligible for funds from the Treasury’s rescue plan to bolster financial firms.
American Express, the biggest U.S. credit-card issuer by sales, became a bank holding company last month, leaving Discover as the last stand-alone consumer card company in the country. That business model no longer works because it’s too dependent on the capital markets, said David Robertson, publisher of the Nilson Report.
