Becoming American Express:
150+ Years of Reinvention
and Customer Service
TRYING TIMES
In 1987, American Express Bank added $950 million
to its reserves against outstanding loans in Latin America. Later the same
year, the U.S. stock market experienced its largest drop since the Great Depression; and in the aftermath, Shearson was rocked by a
series of serious missteps and setbacks. The situation ultimately became so
dire that in 1990, American Express repurchased all of Shearson’s remaining
publicly traded stock for more than $1 billion and provided a critically
necessary capital infusion.
Continuing problems at Shearson masked an ultimately more disturbing development. Serious problems were developing in the core American Express Card business. Despite the introduction in 1987 of a new revolving credit product in the United States, the company’s share of the U.S. card market fell during the late 1980s and early 1990s. Trouble was also brewing on the merchant front. In Boston in 1991, a group of restaurateurs, upset about what they felt were American Express’ unfairly high rates, staged a revolt that came to be known as the Boston Fee Party. Outside the United States, card suppression – when merchants try to dissuade customers from using the American Express Card – began to rise.
Years later, the company’s chief executive would say, in retrospect, “If not for the strength of our brand name, American Express would have collapsed by the late 1980s.”