The Federal Reserve has approved a request by American Express to transform itself into a bank holding company, a move that makes the card company eligible to participate in current and future programs to provide help to ailing financial institutions.

Federal Reserve banking regulators said they approved its application because of the “unusual and exigent circumstances” affecting financial markets and the Amex's potential need to tap into the rescue funds available to shore up the economy. As a bank holding company, American Express would gain access to the Treasury Department’s bailout plan for banks, improving liquidity and possibly giving the company the opportunity to purchase a traditional banking operation.

Amex has owned a savings bank and a commercial bank for some time, but most of the card company's financinghas come from commercial paper markets, which lately have become a difficult and expensive place to borrow.

“Given the continued volatility in the financial markets, we want to be best positioned to take advantage of the various programs the federal government has introduced or may introduce,” said Amex CEO Kenneth I. Chenault. “We will continue to build a larger deposit base to broaden our funding sources.”