Financial Services Hitting the Credit Limit

No longer good as gold, American Express struggles to recover from painful attempts to diversify and a slump in card fortunes

In the race to create vast financial supermarkets, American Express was among the first in line. Backed by a blue-chip image and the clout of its ubiquitous green charge cards, the Manhattan-based conglomerate went on a spending spree in which it acquired brokerage firms, insurance companies and a real estate business in an ambitious bid to offer a grocery list of investment services under one roof.

Initially, the strategy produced one success after another, contributing to American Express's almost mythic reputation for savviness and invincibility. But a recent chain of misfortunes, miscues and poor managerial decisions is prompting a reappraisal of...

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