Amex’s TARP mystery…

On Friday, American Express (AXP) signed this agreement with Treasury to collect on the $3.39 billion in TARP funds it announced it had been approved for back on Dec. 23.

Like the 165 other companies that have already signed similar agreements with Interim Assistant Secretary for Financial Stability Neel Kashkari since Oct. 30, the contract, which stretches on for 37 pages, is pretty much standard. Except that Amex is one of only 13 TARP recipients with this new carefully worded clause in the language:

4.12 PREDOMINANTLY FINANCIAL. For as long as the Investor owns any Purchased Securities or Warrant Shares, the Company, to the extent it is not itself an insured depository institution, agrees to remain predominantly engaged in financial activities. A company is predominantly engaged in financial activities if the annual gross revenues derived by the company and all subsidiaries of the company (excluding revenues derived from subsidiary depository institutions), on a consolidated basis, from engaging in activities that are financial in nature or are incidental to a financial activity under subsection (k) of Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) represent at least 85 percent of the consolidated annual gross revenues of the company.

A quick skim of TARP contracts shows that this new clause was added for the first time on Dec. 22. But since then, while 60 companies have signed TARP letters with Treasury, only 13 companies, including Amex have this new language in their letters. Among those who don’t are Citigroup (C), which signed its agreement on Dec. 31.

As the WSJ reported last week, Treasury has already spent $7.8 million on legal fees. The question is was this just an oversight on the part of the attorneys drafting the contracts, or is it some other sort of oddity?