Ronald Stovall – Sr. VP IR Kenneth Chenault – CEO Daniel Henry – EVP & CFO

Robert Napoli – Piper Jaffray Christopher Brendler – Stifel Nicolaus Craig Maurer – Calyon Securities Sanjay Sakhrani – Keefe, Bruyette & Woods David Hochstim – Buckingham Research Ken Bruce – Merrill Lynch Bruce Harting – Barclay’s Capital [Kevin Stera] – Sanford, Bernstein Scott Valentin – Friedman, Billings, Ramsey

Welcome to the American Express 2008 third quarter earnings conference call. (Operator Instructions) At this time, I’d like to turn the conference over to your host, Senior Vice President of Investor Relations, Ronald Stovall. Ronald Stovall : We appreciate all of you joining us for today’s discussion. As usual, it’s my role to remind you that the discussion today contains certain forward-looking statements about the company’s future financial performance and business prospects, which are subject to risks and uncertainties and speak only as of today. The words believe, expect, anticipate, optimistic, intend, plan, aim, will, should, could, likely and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements included in the company’s financial and other goals are set forth within today’s earnings press release, which was filed in an 8-K Report and in the company,’s 2007 10-K Report already on file with the Securities & Exchange Commission. In the third quarter 2008 earnings release, supplement and presentation slides which are now posted on our website at www.ir.americanexpress.com and on file with the SEC in an 8-K Report, we have provided information that describes the company’s managed basis and other non-GAAP financial measures and the comparable GAAP financial information and we explain why these presentations are useful to management and to investors. We urge you to review that information in conjunction with today’s discussion. Kenneth Chenault, Chairman, and Chief Executive Officer of American Express will provide some brief opening comments, then Daniel Henry, Executive Vice President, and Chief Financial Officer will review some key points related to the quarter’s earnings through the series of slides included with the earnings document provided and provide some brief summary comments. Once Daniel completes his remarks, we will turn to the moderator who will announce your opportunity to get in to the queue for the Q&A period where both Kenneth and Daniel will be available to respond to your questions. With that, let me turn the discussion over to Kenneth. Kenneth Chenault : Thanks Ronald, before Daniel covers the results, I wanted to say a few words about the economic environment, the reengineering efforts planned for the fourth quarter and our perspective on funding. Now given the difficult operating environment our business performed relatively well this quarter, we’ve been very cautious about the economic outlook for most of this year, and that certainly continues today. But based on recent trends, we believe consumer and business sentiment is likely to deteriorate further and we see this translating into weaker economies around the global well into 2009. Now the market turmoil of the past few weeks is clearly going to make conditions even more challenging. Card member spending in such an environment is likely to be very soft. Loan growth will be restrained and some of that will reflect the steps we’re taking to lower credit risks. Now credit indicators are likely to reflect the weaker economy including a continued downturn in the housing sector. Now to prepare for this more difficult environment we are moving ahead with plans that will result in restructuring charges in the fourth quarter. Through a combination of cost reductions and revenue building actions, we expect to be able to free up a significant amount of resources that would be available to earnings starting in early 2009. We will continue to invest in longer-term business building actions and programs but we’re going to be very selective with our investment dollars in this environment. Our intent is to be in the strongest possible position to weather an unsettled economy that will be with us well into 2009. In that context we outlined our funding position in an 8-K filing a few weeks ago and noted that we now have broader access to the Fed’s discount window. The headline, so to speak, is this. I believe that we can absolutely stay liquid; we have contingency programs in place that would allow us to navigate through this environment for at least 12 months, even under extreme market conditions. Now by way of an update, since the filing we are now also in a position to participate in the commercial paper funding guarantee programs that were recently announced by the fund. In short, we feel very good today about our overall funding position. We expect to be in a position to capitalize on growth opportunities once the environment improves. But for now our focus is on staying liquid in our funding, staying profitable in generating excess capital, and investing but very selectively in growth opportunities and we are confident that we can do all three. Now I’m going to turn the call over to Daniel, for his remarks and then we will be very happy to take your questions.

Thanks Kenneth, so let me start on slide two with our top line financial information, revenues on a GAAP basis grew 3%. I would note that on a managed basis they grew 9%. Diluted EPS of $0.74 was 21% below 2007 as a result of a slowing in spend growth as well as higher credit losses. ROE remains very healthy at 27.8%. This performance is below our on average and over time financial targets and will continue to be as long as the economy remains weak. Looking now at slide three, we have a number of changes in reporting. First AEIDC is an investment subsidiary of AEB which we closed the sale in the first quarter of this year and we agreed to retain this sub until September of 2009. Now that we are within one year, we are going to move this from continuing operations to discontinued operations. AEIDC has about $660 million of assets; cash represents $340 million of that total. We filed an 8-K on September 12 restating data back to 2006. Next is the net write-off rate, as you know we have historically included principal, interest, and fees in our calculation of net write-off rate. Back in the first quarter, I indicated that we would be moving to the industry standard that only includes principal in the write-off rate. So we have done that this quarter and we have restated the prior period information. Next is the 30-day past due methodology change. As you know we have various cycles throughout the month, they don’t all end at the end of the month. It is the practice in the industry to take cash received after the cycle cut, which could be anytime during the month, and apply it to the oldest delinquency bucket. We had not done that in the US and so we are now changing to the industry standard and again prior period information has been restated for that. Turning to slide four and speaking about capital, despite the impact of the slowing economy on our results, through earnings, we retained or increased capital by over $600 million in the third quarter and by almost $2 billion year-to-date. This demonstrates our capital generation power of our business model. We did not repurchase shares in the third quarter and we do not plan to repurchase shares as long as the economy remains weak. Instead, we will continue to build capital. Looking at slide five, our metric performance, billed business continues to grow faster then our competition at 8%, although it has slowed. In the first quarter, our billed business grew by 14% and in the second quarter by 12%. During the third quarter while the average was 8% growth, September grew at 5% and we have seen a further slowing in the first 15 days of October. Business was stronger in international consumer, global corporate card, and G&S, although we did see some slowing in the third quarter in each of these businesses. In the quarter, we added two million net new cards since the second quarter and 7.4 million net new cards since last year. In the quarter, we had 4% growth in proprietary cards and 25% in network cards. If we look at managed loans, we had growth of 5%. This is about the same as our competitors. We are not growing faster then the industry. This is a reflection of the economy, slowing spend, and our credit actions. And also note that travel sales have slowed significantly from last quarter. Looking now at slide six and revenue growth, GAAP revenue as I mentioned in the bottom right hand corner grew at 3% but on a managed basis, we grew 9%. Discount revenue grew 5% based on the 8% billed business growth that we saw. Net card fees reflect proprietary card growth and higher average fees per card. Net interest and securitization income decreased 7%. The decline was driven by lower securitization income due to higher credit losses and a write-down in our OI strip. Net interest income increased 13% as higher net interest yields more then offset the lower owned loan balances on the balance sheet. We will see pressure on yield in the fourth quarter due to current LIBOR levels, which are way off historic relationships to Fed funds. Historically LIBOR has been 20 to 40 basis points above Fed funds. In early October, they were nearly 300 basis points above Fed funds and peaked at 4.59%. This is the one-month LIBOR rate. So we will be watching this closely and the relationship between LIBOR and Fed funds. Fortunately, today LIBOR dropped 43 basis points and now stands at 3.75% and we will continue to watch its direction. Moving to slide seven in terms of metrics within USCS, here billed business grew at 4%, down from 6% in the second quarter and 8% in the first quarter. Small business growth has been higher then consumer throughout 2008. We continue to acquire card members with positive economics and we encourage credit worthy card members to spend but we are managing small business spending very closely. Credit operations is limiting or stopping spending on customers with high probability of default. We continue to selectively invest in US consumer and small business and grew cards in force 4%. Card member loans you can see we securitized about 35% of loans as of the third quarter of 2007. We have historically securitized less loans then our competitors so we had the capacity to do more securitizations in the period of stress and that’s exactly what we’ve done this year. As we’ll discuss later approximately 50% of our funding was unsecured and 50% was done through securitization. Moving to slide eight, metric performance for international consumer, we continue to have strong metrics in international consumer although we did see some slowing in billed business in the third quarter. FX adjusted growth in the first and second quarter was 10% compared to the 8% in the third quarter. Cards in force growth and average spend growth reflect our investments in charge card and premier lending in certain international markets. Card member loans are well controlled although we did start to see some weakness in credit metrics in Mexico. Slide nine, global corporate services also continues to have very solid metric growth although again here billed business slowed in the third quarter. First and second quarter growth on an FX adjusted basis was about 10% and now we see 7% FX adjusted growth. Card in force growth and average spend growth are very positive. Although travel sales of 14% compare with 17% growth in the second quarter, again reflecting the slowing economy. Slide 10, global network and merchant services, spending growth of 8% was driven by 7% growth in US retail and everyday categories which represents 70% of US billings and international spend growth. US T&E spending grew 2%. Global network services continued to have very strong-billed business growth at 29%. Moving to slide 11, marketing and rewards growth of 7% reflects marketing at similar levels to the third quarter of 2007 and higher rewards cost inline with volume growth. HR and other operating is up 2%. If we exclude the VISA MasterCard payments which are netted on this line, it grew 10% which reflects investments in sales force as well as investments in certain international consumer markets. Charge card provision while increasing $72 million continues to be well controlled. Lending provision on a GAAP basis is up 65% with higher growth on a managed basis. Both charge and lending reflects the impact of the economy. In a minute I’ll review a number of credit metrics with you, but before I leave this slide you’ll note that the tax rate is 20% which reflects the resolution of certain prior year items, and the benefit of the revision of an estimated in the annual effective tax rate. Moving to slide 12, the net charge card loss ratio has increased slightly across each of the businesses. Overall the loss rate increased by four basis points. We continue to control spending very thoughtfully, balancing both the short-term and long-term view. Looking at slide 13 we see the charge card 90-day past due have also moved up slightly across each business. In aggregate past dues have increased 20 basis points, although we are seeing a greater impact on the P&L from our lending portfolio which we’ll look at next. On slide 14 you can see the net write-off rate. In the second quarter, we indicated to you that the third quarter write-off rate would increase. The US write-off increased 60 basis points compared to the second quarter and in the US is up 290 basis points compared to the third quarter of 2007. This rate is faster then some of our competitors’ growth rates. This is due for three reasons we’ve discussed before. Small business is a higher percentage of our business, and small business has a higher write-off rate although small business continues to be very profitable. We have a greater concentration in card members and balances in Florida and California because it is a more affluent area, and due to the housing environment, we are seeing higher losses there. In addition, we have historically had faster growth in spending and a consequent faster growth in loans although I’ll point out that in the third quarter we are growing at the same rate as our competitors. In the US while the write-off rate in the quarter was 5.9% the write-off rate in September was 6.1%. We expect the fourth quarter to be higher then the third quarter and we expect the first quarter of 2009 to be higher then the fourth quarter of 2008. International consumer ticked up somewhat primarily driven by credit metrics in Mexico. Moving to slide 15, after only a modest increase in the second quarter US lending managed 30-day past dues increased 60 basis points reflecting both increases in the current to 30-day past dues category and the 30-day to write-off roll rates. Reflecting the inherent risk in the portfolio we increased managed credit reserves by over $250 million. International consumer 30-day past due had a more moderate increase, again largely driven by Mexico. Now let me turn to capital funding and liquidity, on slide 16 you can see our capital ratios. We believe we have historically been very prudent in our approach to capital retention which was very consistent with our goal of maintaining a strong A rating. Let me just speak for a moment about the rating agencies, today Moody’s moved our parent company rating from A1 to A2 and our funding subsidiaries from AA3 to A1. Moody’s previously had our funding subsidiaries a notch above all the other rating agencies. They also reaffirmed our short-term rating of P1. They have us on negative outlook given the current economic environment and capital markets. This is similar to many other financial institutions. I’d also note that S&T put us on negative outlook in July and we meet with them and other rating agencies periodically to update them on our financial results, capital and liquidity plans. We believe those plans are both thoughtful and will enable us to continue to fund in this difficult environment and our strong capital position provides us with the strength given the environment as well, so a combination of capital funding and liquidity plans we believe put us in good [sted]. Despite the environment we continue to generate capital during these difficult times compared to some others who have taken substantial hits and needed to raise addition capital. We will continue to generate capital and we will continue to forego our share repurchase until business conditions improve. As you can see from the chart our capital ratios improved throughout 2008. We have a well established method with the rating agencies of doing a bottoms up calculation asset by asset to calculate our capital needs and then we keep a layer of surplus on top of that. In 2008 we are building that surplus to higher levels. I’ll also note related to capital that based on a treasury department clarification issued today, it suggests that we may be eligible for the capital purchase program. We will be reviewing the programs’ details and definitions. Let me move to slide 17, funding, our goal is to fund ratably over the year. We have been successful at meeting this goal in 2008, funding when many other companies could not although we have paid higher spreads. As you can see in the chart, we raised $23 billion year-to-date compared to a funding plan of $27 billion. This funding has had a weighted average term of six years, although from a spreads perspective we have paid 165 basis points above one month LIBOR. In recent years we had been paying 20 to 40 basis points above one month LIBOR. We are also looking to continue to diversify our funding sources. The new retail note program which began in late August has raised $400 million with maturities from three to five yeas. The CD program which started a few weeks ago has raised almost $200 million with maturities ranging from three months to two years. It is our plan to expand our funding from deposits. Turning to commercial paper we have had full access to at historical levels, at similar prices, although the weighted average maturity has become shorter. In August on a daily basis we funded $745 million, in September on a daily basis $854 million. The average cost during that period was 2.56%. In October on an average daily basis, we have funded $627 million and the cost has been 2.15%. However similar to other financial institutions long-term unsecured and secured markets have been unavailable since mid September. Now let me review our liquidity plan which we believe is comprehensive and enables us to meet our funding needs even if we do not have access to commercial paper, unsecured or secured markets. Now looking at slide 18, as you would expect liquidity has been an important focus for us. On October 6 we filed an 8-K outlining the strength of our liquidity plan. More recent announcements by the Federal Reserve further strengthens our position. Let me review with you our funding needs over the next six months, and 12 months and how we plan to utilize liquidity resources if commercial paper, unsecured and secured markets are unavailable. So as you can see on the chart we have a net funding need for commercial paper. Our commercial paper is actually at a higher level but from those issuances we are holding certain levels of cash. So our net need for the commercial paper is $4 billion, net bank time deposits is $2 billion and we have maturing long-term debt of $12 billion. We would meet those needs by using our liquidity investment portfolio of $5 billion, our conduit facility of $5 billion, as well as the commercial paper funding facility that is available to us. If we have to fund by 12 months, we would again have requirements of net commercial paper and net time deposits but our maturing long-term debt would be $21 million so we have—let me modify that. So in the first column for six months we have $11 billion and for 12 months in total we would have a funding requirement of $24 billion. In that case again we’d use our liquidity portfolio, the conduit facility and we’d use the commercial paper funding facility which runs through April. After that we would rely on the temporary liquidity guarantee program where we can access we estimate $8.8 billion and that in combination with the Fed [taps] and discount window would enable us top meet our $24 billion of funding needs. So the point here is not to demonstrate how it will play out but instead to give you an understanding of the various options we could deploy to ensure that the company can fund during a prolonged period of disruption. Over recent months there’s been a lot of discussion about the effectiveness of wholesale funding model versus the bank deposit model and while we see the merits of building a deposit capability the reality is most people who have substantial deposits are also large capital markets borrowers. The bottom line is that we believe we are well positioned with capital, funding capabilities and liquidity resources to successfully navigate through this difficult environment. With that let me conclude with a few final comments, despite the impact that the weakening economic environment has had on our customer spending, credit performance and bottom line this quarter many key business metrics that serve as an indicator of our competitive position continue to perform relatively well. We see that in our overall bill business and cards in force growth rates, where our performance demonstrates the benefits of our marketing and rewards investments over the past several years. These benefits were more visible within our international consumer, global commercial services, and global network and merchant services segments where our volumes in card growth were relatively strong although bill business growth did slow somewhat versus prior quarters. In the US the slowing growth in our managed lending balances is inline with the tempered spending environment that also reflects the proactive credit actions and tighter standards that we’ve implemented this year. In the quarter despite the decrease in our own loan balances we did increase our loss reserve levels. We believe this action is both appropriate and prudent, positions our reserves to reflect the inherent portfolio risk and our expectations for increased write-off levels which we anticipate will rise further in the next two quarters. Our investment portfolios hold high quality securities and we did not recognize impairments within continuing operations during the third quarter. As you would expect both spending and loan volumes slowed in the latter part of the quarter and into October as increasing stress in financial markets world wide further eroded consumer and business confidence levels. In addition LIBOR rates have been particularly high in October and will negatively impact our variable debt borrowing costs during the month. LIBOR levels in November and December will be another important factor impacting results in the fourth quarter. Looking forward its our belief that today’s difficult economic environment will persist well into 2009. We will be impacted by the resulting slowdown in spending as well as continued pressure on write-off rates. However we believe our business model will be positioned to generate earnings and free equity cash flow that will build capital even in an economic environment that is likely to be the weakest we’ve seen in many years. We also believe we have the capital strength, the funding in place and the liquidity, capacity and flexibility to affectively manage through these difficult market conditions. In fact our current liquidity resources which have been enhanced by the benefits available through the Fed commercial paper funding facility and temporary liquidity guarantee program, are designed to fund maturing obligations in normal operations for at least 12 months even if capital markets are not available. We are working to best position the company to withstand the tests that lie ahead. Growth opportunities continue to exist in the marketplace but over the coming quarters we will have to be even more selective with our investment dollars and work to prudently balance near-term performance against long-term profitability and growth. As we’ve indicated before we will be implementing an accelerated reengineering program over the latter part of the year which will result in a restructuring charge in the fourth quarter. We expect the benefits of these actions to begin in the first quarter of 2009 and build throughout the year. In addition we will also be implementing a number of pricing actions which will help mitigate the negative impact of the current credit market and economic environment. The anti trust settlement we reached with VISA MasterCard also provides with a multi year source of income that can help to lessen the impact of the environment and when conditions improve, give us the ability to step up investments in the business. Collectively we believe these factors will position us for the difficult period that lies ahead. While the current economic turmoil has negatively impacted our results, we continue to believe our business model remains strong and that we are positioned to generate returns to provide capital flexibility and strength. We have a strong position within the payments industry, our brand is recognized and respected around the globe, we have shown the ability to adjust to the economic conditions whether it be to implement defensive measures or take advantage of competitive opportunities. Our balance sheet is appropriately positioned with capital funding and liquidity profile that provides flexibilities in these volatile times, and across all our businesses we have instilled a strong focus on the customer, some of who we need to stay close to regardless of the environment. Our ultimate goal is to ensure that American Express navigates through these conditions in the best position possible relative to our payments competitors, and the overall industry. Thanks for listening and we are now ready for your questions.

(Operator Instructions) Your first question comes from the line of Robert Napoli – Piper Jaffray Robert Napoli – Piper Jaffray: The restructuring if you could quantify the charge in the fourth quarter and the outlook for savings benefits into 2009 from the restructuring. Daniel Henry : We have not completed all of the work on what programs we are going to institute. Once we do have those plans finalized which we think will be in the near-term within the fourth quarter, we will make an announcement in terms of what the reserve amount would be as well as the anticipated savings that will be generated through the restructuring programs. But we think they will be very important in terms of enabling us to continue to generate earnings and capital in 2009. Robert Napoli – Piper Jaffray: On loan growth, the outlook for growth or shrinkage, in line with that where do you think a peak, its very difficult to say but if you could try to put some gauge around how high you think credit losses could go in 2009, is it 200 basis points above the current levels and if you tie that into loan growth—

I think what you’re seeing is as our spending growth has come down, our loan growth has come down at the same rate which I think is a real positive. I think that helps and is a reflection of both the economy plus the credit actions that we are taking. As that slows it will have a negative effect on the denominator effect of the write-off calculation and as I said, we expect write-offs to increase over the next two quarters but its not our plan to actually forecast exactly how much it will increase.

Your next question comes from the line of Christopher Brendler – Stifel Nicolaus Christopher Brendler – Stifel Nicolaus: Can you talk about your deposit business, I take it the retail note program, is it on top of your deposits you already gathered in the June quarter, and just on a broader strategic point, I know you mentioned or alluded to the fact that you don’t think you need to change your business model, but why wouldn’t it make sense to add a broader retail deposit capability at this point given all the assets are out for sale right now?

We would agree with you that it makes sense to diversify our funding sources. I think the note program which raised $400 million since its inception late August and the CD program which raised almost $200 million in just a couple of weeks, is just the beginning of actions that we plan to take to really build a broader deposit base. We think that makes a significant amount of sense and we’re just at the beginnings of that it’ll be a focus of ours over the next year or two. Its something that will take time to build but we think over time it’ll be an important part of our funding base. Kenneth Chenault : The other point that is important is as we look at payments we are diversified in a major way in payments and if we look at how we’ve been able to build out B2B which has a lower credit risk, I think we have been able to demonstrate that there are some very attractive growth opportunities with a lower risk profile. What I also think is important is as we look at becoming if you will a retail bank, we think there are other things that go with that, that concern us and we think that what’s critical is that we have a diversity of our business model from a deposit standpoint, we are focused on making progress there through the programs that Daniel went through. But what I think is important to understand is the diversity that we have in our payments business model. Christopher Brendler – Stifel Nicolaus: What exactly do you mean by net CP, why do you issue CP and then just stick it in cash, and then are the trust metrics for the lending portfolio effected by the delinquency rate methodology change?

As part of our liquidity plan we hold cash which is very important to us because to the extent other sources aren’t available to us we want to have sufficient cash so that we can bridge over into selling our treasuries that are part of our liquidity program or bridge into the financing conduit. So its really just to give us the flexibility in the short-term to start to utilize the other facilities that we have in place that’s the reason that we hold cash. In terms of does the change impact the trust, the answer to that is no. Christopher Brendler – Stifel Nicolaus: Is on the current basis, or its on the old basis.

No, the trust is done consistent with the new basis which is applying to the older balance where there was the collections that come in after the cycle date. Christopher Brendler – Stifel Nicolaus: Okay so the change you made, just made it consistent with the trust/

Yes.

Your next question comes from the line of Craig Maurer – Calyon Securities Craig Maurer – Calyon Securities: Could you elaborate on the pricing changes you mentioned and regarding the spending behavior you’re seeing, you alluded to spend shift in the states from toward more commodity driven everyday type spending, do you think that you’re losing spending from your good clients to existing debit cards in their wallet because of the type of spending that a lot of their funds are going toward now?

The pricing changes given the environment that we’re facing, we will put pricing changes in. It will be broad based. It’ll be surgical to certain portions of the portfolio but we’ll be putting in some pricing changes that will increase APRs for certain customers by 200 or 300 basis points. We think its prudent given the nature of those products and the economic environment that we face. As it relates to spending behaviors I think for many years we’ve been focused on shifting more and more spend to the everyday category. We think that has been part of what’s enabled us to continue to take market share in the US and certain markets internationally. We’re going to continue to push into those areas because we think its beneficial to the long-term health of the franchise. Kenneth Chenault : I think that certainly what we have seen from the major issuers would suggest that we are continuing to have a very strong position with the affluent customer and we have not seen signs of debit encroaching on share in those categories.

Even though our spending did slow compared to prior quarters our spend was still stronger then the competition so it would appear that we’re continuing to take market share. Craig Maurer – Calyon Securities: Are you doing anything on the merchant or the issuing bank side in terms of your pricing, whether its discount rate related or cross border fees related or --?

We continue on the merchant side to price based on value and as you’re aware our discount rate would normally fall by 200 or 300 basis points a year as we push into the more everyday spend categories. But because we bring value to certain categories we’ve gone back to them and repriced so we will continue to use the same philosophy of pricing based on value with our merchants. Kenneth Chenault : I think at the end of the day, merchants are very focused on driving volume and we have programs that can help them drive that volume in their places of business.

Your next question comes from the line of Sanjay Sakhrani – Keefe, Bruyette & Woods Sanjay Sakhrani – Keefe, Bruyette & Woods: On the higher LIBOR rates, how much of your funding is variable rate and subject to LIBOR impacts?

About 70% is currently variable rates. Sanjay Sakhrani – Keefe, Bruyette & Woods: So basically that’s how we should think about the impact in aggregate from a margin standpoint right?

There’s two impacts, one is the extent LIBOR is just higher it effects all of our funding but its particularly important as it relates to our variable price products because there we’re looking for a normal spread between prime and LIBOR which has historically been about 270 basis points. To the extent there’s compression on that spread that will affect our profitability and our margins as well. Sanjay Sakhrani – Keefe, Bruyette & Woods: How much of your assets are variable rate?

Of our loans about 60% are variably priced. Sanjay Sakhrani – Keefe, Bruyette & Woods: On this temporary liquidity guarantee program, when does it actually kick in and this subject to meeting the criteria for participation, have you looked into it, you do qualify right.

We do qualify. I think there’s still a lot of learnings to be had on exactly how the program will work. What we’ve done is looked and seen that of our unsecured debt between September 30 of 2008 through June 30 of 2009 we estimate that $8.8 billion will mature and qualify for this program. There may be some other aspects that potentially qualify but based on our reading we feel pretty certain that the $8.8 billion will be qualifying for the guarantee. I think they have to administratively get the program up and running. The commercial paper program they’ve had discussions with a number of people including ourselves and they’re actually going to have registration for the commercial paper program starting I think on the 27th of October and then I think shortly thereafter people will be able to access it. I don’t know the exact timing when we’ll be able to benefit from the liquidity guarantee program. I think that’s all in the process of evolving. Sanjay Sakhrani – Keefe, Bruyette & Woods: Is there a P&L impact from the charge-off rate disclosure change or were you always suppressing revenues?

There’s no impact on the P&L. Its really just a matter of what line item it flows through on the P&L and regardless of what line item it flows through its really just a matter of what people include in this write-off calculation. So we happen to be including principal, interest and fees and other people were only including principal. So it has no impact on the bottom line of our income statement. It just makes it easier to compare.

Your next question comes from the line of David Hochstim – Buckingham Research David Hochstim – Buckingham Research: In the quarter was there any effect from increasing the amount of loans that you securitized on provisioning or is that a longer-term effect?

When we do securitizations when you look at the GAAP P&L we would be putting up reserves on the GAAP P&L for all owned loans that are on our books and the impact of credit for the piece that’s securitized is running through securitization income which has always been the case. David Hochstim – Buckingham Research: I just trying to think about what you show as the loss provision, if you securitize more then the loss provision in the current period would be somewhat less.

Yes, on the GAAP basis, that’s right. But we also in the press release attachments, give you what the provision would be on a managed basis so you can look at it either on a GAAP basis or use the material in the attachment to do a calculation of what it would it be on a managed basis. David Hochstim – Buckingham Research: Regarding the change in LIBOR how much of the $100 million was related to interest expense and how much was credit and--?

I don’t know that we’ve broken that out, I think its both a combination of interest and credit but I would say the credit is the thing that has the greatest impact on the IO strip. David Hochstim – Buckingham Research: In terms of sensitivity to LIBOR remaining elevated relative to Fed funds there’s not much IO left so if you didn’t have another adjustment on credit, there’s not that much more to take as a write down is there?

The IO strip now stands at $37 million. David Hochstim – Buckingham Research: Could you provide some color on the increase in the charge card [boss] ratios and the [inaudible] rates and how much of that is small business and how much is consumer and what’s going on this cycle relative to 2002 or 1992 in terms of the deterioration you’re seeing.

Yes we did see a tick up this quarter. We saw a very modest increase in provision in the second quarter— David Hochstim – Buckingham Research: The charge-offs, the year-over-year number, there’s a big increase there.

Its $72 million increase in provision in charge card but when you really look at our total company, our total business the real impact is coming from lending. David Hochstim – Buckingham Research: Historically your charge card business has had lower loss rates and its quite low and international I guess even with Mexico and in corporate, the ratio is showing pretty significant uptick, are you seeing that in consumers or small business or--? Kenneth Chenault : But the point is we have been at historical lows, we’re coming off historical lows on charge card. David Hochstim – Buckingham Research: So is it small business that’s accounting for most of that or --?

I think it’s a combination of both, I think we historically have had and currently have higher loss rates on our small business portfolio then we have on consumer but quite frankly both of them have moved up at relatively similar rates so there’s no unusual disproportionate impact from small business. Kenneth Chenault : I don’t think it’s a major difference in the rate movement relative to small business and consumer but we’ve seen some obviously worsening.

Your next question comes from the line of Ken Bruce – Merrill Lynch Ken Bruce – Merrill Lynch: I understand you don’t want to be over reactive to the current market environment, but I’d like to understand your pricing strategy in terms of having surgical price increases on certain parts or certain products within the franchise is certainly understandable, but it looks like the funding pressure is going to be much more broad based and is going to have a significant compression in margins overall. How are you going to balance between the pressure you’re seeing on the funding side of the business with only limited pricing power or willingness to re price and how you’re going to balance that for overall profitability.

The funding pressure is going to come certainly if the markets stayed frozen for a protracted period and LIBOR stayed up, it would put tremendous pressure. I think all the actions that the government is taking are designed to help pull off the freeze that we see in the markets. If that happens it would be logical to expect that LIBOR would start to come down. Last week it was pretty stubborn and only came down a limited amount, but today we saw a pretty big drop in the one-month LIBOR rate, it was 42 basis points. So you’re right if it stayed at these levels that would put tremendous pressure. I would say its my expectation that its not going to go back to the 24, 40 basis points above Fed funds but it’ll improve significantly from here. The other thing I would say is the pricing is only a portion of our reengineering. So our reengineering also has elements that are looking at costs whether they be the structure that we have currently in terms of our employee contingent or whether its looking at processes so we’re going to obtain some benefit in reengineering from pricing but also a very significant benefit from the other actions that we’re going to take on the cost side. Kenneth Chenault : I think there’s a strong focus on expenses and we also believe that there are opportunities to shift more volume from off line to online and we think there are adjustments that we can make in our expense structure not just to deal with 2009 but in fact to have a business model that allows us to compete in a more effective way on a multi year basis. But this is not just a situation that we’re focused on revenues, and making changes relative to pricing, but we in fact have gone through an extensive exercise as far as our expenses are concerned. Ken Bruce – Merrill Lynch: And that’s the piece that you’ll be taking to fourth quarter and providing some addition clarity around? Kenneth Chenault : Yes, absolutely. Ken Bruce – Merrill Lynch: I can under the reaction to LIBOR but spreads are obviously wide as well, how much of the liquidity backstops in terms of the ABS conduit facility and commercial paper funding facility, is that pricing already established or is that something you’re going to have to go to an at market type financing relative to LIBOR as well as spreads and what’s your big picture economic backdrop that you’ve got in your own forecast particularly as it relates to unemployment here in the US?

On the funding side based on our understanding for commercial paper, three month paper what we can estimate the pricing would be would be about what we would pay today for three-month paper so we think on the commercial paper side it will be competitive. Within the liquidity guarantee we’ll have to see what the market prices are for R rating with a government guarantee and I don’t think that’s really played out yet but I would think that those are going to be at market prices and we’ll have to see how it evolves but I don’t think there will be any steep premium there in either case. There is a small fee related to participating in the commercial paper market but its relatively modest. Switching over to economic outlook and unemployment, our assumption as we do our planning for next year is that unemployment will increase reasonably substantially in 2009 and we’re reflecting that in our thinking in terms of where we think credit losses will be and where billings level will be and that, I might call pessimistic but probably realistic view of where the economy will be is what caused us as a management team to decide that it was appropriate to do reengineering so that we can as Kenneth said both deal with the short-term but also position ourselves well for when the economy improves.

Your next question comes from the line of Bruce Harting – Barclay’s Capital Bruce Harting – Barclay’s Capital: Can you give us an update on the ABS market and any plans to try to tap that in the fourth quarter and then when I look at the long-term funding and the American Express bank FSB and Centurion Bank, can you remind us what charters you have there and as part of restructuring when you talk about that, is that inclusive of debt restructuring? You said you don’t need a retail bank but just if you could remind us how flexible are those bank charters and the ability to continue to fund longer term through those and at what cost.

Since mid September I think we did an issuance in the second week of September, I don’t think in the last four weeks any major financial institution has done any long-term funding. I think maybe Caterpillar did a small offering somewhere in late September but basically both the secured and unsecured markets are frozen and unavailable to either us or anyone else in financial services. No one has ventured into those markets. Certainly I think many people are hopeful that the actions that the government is taking are designed to directly help thaw that freeze and if the markets are open we will access those markets. I think you could look in the early part of 2008 when many people were not able to fund, we were and we funded ratably over the quarters based on our funding plan even though we needed to pay up in terms of spread. So if the markets open we think we’ll be one of the first people who have access and we will access them. In terms of our banks charters, we have an ILC in Utah which we’ve had for many years. We also have a Federal Savings Bank, FSB, so those are our two banks. The FDIC regulates the ILC in Utah and the OTS regulates the Federal Savings Bank. Both are well-established institutions that have been with us for some time that enables us to fund our loan book.

Your next question comes from the line of [Kevin Stera] – Sanford, Bernstein [Kevin Stera] – Sanford, Bernstein: The ongoing credit crisis continues to move in unpredictable ways and I was hoping you could give specific examples about how you’re responding differently during this economic downturn then you might have in previous ones.

I think our sophistication as a company is certainly light years better then it was in the early 90s and is substantially more sophisticated today then it was in 2001. Each downturn is different in nature and this downturn has had a lot to do with housing so we have substantially improved our ability to integrate housing date whether it be who you have your mortgage with or what geography you live in are things that we have built in to credit scoring. We also look at what industry you’re in so if you’re in an industry that’s healthier we may deal with you in a different way then if you’re in an industry such as construction that is being impacted to a greater degree. We also obviously use all information that’s available to us at credit bureaus so we are very focused on not only what type of utilization you have on your line with us but the what you have with other institutions. From there we can see whether you are seeking additional credit so we look to integrate as many factors as we can and what we found is depending on the type of product you have, the level of spending you have, it could be different factors which are the most important to look at to help predict the probability of default. Se we have very sophisticated models that are building in current information on a continuous basis but we are also keenly aware of what’s happening in the marketplace and building that into the decision at the same time. And we are trying to balance the short-term in terms of what our credit losses are but we are also very focused on the long-term and we want to interact with our customers in a way so that we don’t turn away customers who will be excellent profitable customers in the long-term. We’re trying to work that delicate balance. Kenneth Chenault : One of the important things is the micro segmentation that we are engaged in. I think in the early 90s we were new to the lending business with Optima, we had a very limited product. If you look at how we’ve been able to diversify our product line and also the fact that we have particularly in the US dramatically expanded our merchant coverage. So you had a situation in the early 90s that because of the limited merchant acceptance and the fact that we had a limited product line, we did not necessarily get some of the best customers. Now the value propositions have substantially improved. We have improved our merchant coverage. The competitive positioning of our products is quite strong and I think that that helps us in this environment. But I think what’s critical is with the range of products and customer segments that we have is to take all that Daniel said and really then to bring it down to a micro segment level so that we are not just putting in actions that cover the entire card base. We’re really focused on micro segmentation. [Kevin Stera] – Sanford, Bernstein: On page five of your slide deck you show managed card member loans up 5% and owned loans down 9% year-over-year, could you walk through the economics of what determined that distinction in those growth rates? Daniel Henry : The managed growth is the growth of our entire portfolio, 5% which is very consistent with our growth in spending. The owned amount is managed loans less what we’ve securitized so we have securitized more receivables in 2008 and as a result its actually causing owned loans to be lower this year then last year. So the managed number is reflective of the entire business, the owned is just a matter of the fact that we’ve done more securitization during 2008 because its what was available that’s causing owned loan growth to be down. From an economic point of view whether receivables are owned or securitized, 100% of the economics related to those loans accrue to American Express. So on an economic basis there is effectively no difference between the owned and managed loans. [Kevin Stera] – Sanford, Bernstein: Could you talk about what the factors were that led you to securitize the larger fraction and why that was in your best interest in this scenario, in this environment.

For many years many of our competitors have securitized at much higher levels. We have always decided to keep our securitization levels down around 35%. The reason for that is that we thought in stress situations secured lending would be more available at better prices then unsecured lending. So now we are in a stress situation and so we decided to execute against that basic plan and avail ourselves of the fact that we had more capacity to do securitizations so this year instead of doing one-third securitization and two-thirds unsecured, we did it 50-50.

Your next question comes from the line of Scott Valentin – Friedman, Billings, Ramsey Scott Valentin – Friedman, Billings, Ramsey : Just referring to slide 18, the liquidity update, how much flexibility is there in determining, next six months, 12 months, but how much control do you have over the demand that you’ll have for liquidity, if utilization rates go up on credit cards or for some reason spending goes up, etc. how much control do you have over the amount of liquidity you have to fund over the next six and 12 months?

We obviously can control through authorizations and by bringing in new card members what our volumes would be. Certainly we will continue to invest and we want to continue to bring in card members where we’ll have good economic returns. That obviously will be calibrated based on what’s taking in the environment. If its more robust we’ll want to invest. If the economy slows down we want to make sure that we’re making investments that are getting the proper returns and therefore may moderate our investments. What you see here is what we need to meet the maturities that we have on the balance sheet. To the extent we are having good spend growth and good loan growth then I think in all likelihood in that situation there’s going to be access to the credit market. Kenneth Chenault : I think if we’re going to have good spend growth it would mean that the overall economic environment is improving.

To your point that you could have greater utilization on lines, but as we’ve discussed we are very focused on line size. In the past year we have had many more reductions in line size then we have in the past and the number of line increases have been more moderate so we think we are being very active and thoughtful about how we’re controlling spending and therefore loan balances. We really have not seen any change in pay down rates which is another thing that could it. We think that we have the ability to calibrate our business based on the environment and wouldn’t see that causing any undue stress beyond the funding needs that you see on slide 18. Scott Valentin – Friedman, Billings, Ramsey : Regarding capital, prudently you’ve let the capital ratio rise as the environment has gotten worse, do you see a level where you feel comfortable that you have enough capital and you’ll begin returning more capital to shareholders?

I think we have sufficient capital today however given that the economy is slowing we will continue to retain capital quite frankly until we see the economy turn and at that point I think we’ll go back to a process where we’ll be returning capital to shareholders. We haven’t changed our 65% on average and over time target. For many years when we were in a robust environment we were returning more then 65%. So in a period of stress of slowdown, we’ll return less then 65% but on average and over time we have not decided to change that 65% target. Kenneth Chenault : In this economic environment we want to be cautious.

Your next question is a follow-up from the line of Robert Napoli – Piper Jaffray Robert Napoli – Piper Jaffray: On the tax rate, in this type of environment US card is the business that’s under the most stress, what would be a reasonable tax rate?

We’ve said that around 30%-ish is in normal circumstances would be a tax rate to think about. Since the US has the highest tax rate within our mix to the extent earnings there are lower, we’ll see an impact. You shouldn’t be thinking about 20% though, it’ll be something lower then 30%, but I wouldn’t give you a precise calculation. Robert Napoli – Piper Jaffray: Your marketing spend was, you talked about in the past in a tough environment to pull back on is marketing spend, but the marketing spend was stronger then I thought it might be this quarter. Could you give some feel for that. Are you pulling back some levers on marketing spend given your outlook?

I would point out the vast majority of the 7% increase that we saw in the quarter on the marketing was coming from rewards. Marketing we held flat to 2007 levels. We thought there were sufficient opportunities to invest whether it be in our merchant business or in certain markets internationally then it warranted keeping investment levels at a constant level. As we go forward we’ll be calibrating that what amount of marketing that we want to have which will be driven in part by how robust the environment is. We’ll continue to see rewards grow in line with the growth in spending. Our rewards programs are really the thing that power our business and we think it’s a benefit that will help us in whether its robust economy or a slow economy. Robert Napoli – Piper Jaffray: On your net exposure to LIBOR, the net effect on the company from the elevation in LIBOR, if you could go through that once more.

On LIBOR, if rates go up it’ll effect our cost of funds related to charge card where we have no interest rate or as it relates to our fixed rate lending products. Fixed rate lending products may up 40% of our loans. If you look at the 60% of loans that are variably priced, we actually want to lock in a spread so whether interest rates go up or down we would be indifferent. We would be looking for that locked in spread. However that locked in spread is dependent on LIBOR staying with historic levels as it relates to Fed funds. So usually LIBOR has been 20 to 40 basis points above Fed funds. Since we price to our customers off of prime and prime is driven by Fed funds, to the extent LIBOR increases beyond that historic level that creates compression on our spread and it will effect our P&L. So its very important for us to have LIBOR at those historic relationships. Robert Napoli – Piper Jaffray: So its 100% of the fundings against the charge card—

You also have to take into consideration that 30% of our funding is fixed rate and you also have to consider that we don’t fund receivables from charge or loans from lending products 100% with debt. Part of it is funded with capital and part is funded with non-interest bearing liabilities that we have on our books like the rewards liability. You have to factor all those aspects in in terms of calculating the impact.

Your final question is a follow-up from the line of Sanjay Sakhrani – Keefe, Bruyette & Woods Sanjay Sakhrani – Keefe, Bruyette & Woods: On the tax rate, from the deposit gathering franchisers standpoint, would you consider the right acquisition opportunity if it was present to you and are you actively looking for anything? Kenneth Chenault : I think the reality and my position has been pretty consistent here. If an acquisition will accelerate our progress and improve our business model, we’re open to it. But I think the important thing about the focus on retail deposits, is it also comes with a lot of other stuff and the question is what are the economics, what’s the growth going forward and how are we positioned relative to the other opportunities we have to generate growth? And what we think is that we are evolving a funding strategy that will allow us to navigate through these challenging times and we also think the way we have diversified the company to increasingly build our business in those areas that are not as reliant on credit balance the company’s growth and risk as we go forward. And so what I think what is important and I often give this example in the company, is to do a deal where in fact 10% of that deal is going to have an impact on your business and 90% of it is really not core to driving it and the economics are not that good, we have to be very careful. So my point is that we’re open to a range of opportunities but what I’m going to be very focused on is will it generate the type of economics we need to drive our company and will it in fact accelerate our growth. :

Thanks everybody for joining the call and take care.