Recently I have been hearing stories about people having big problems with their American Express accounts. No, not from flagrant spenders but from people who are capable, and at times do, pay their balances daily. A story today from the AP says that American Express wants $3.5 billion of bailout money, presumably to stay afloat.

To be fair to American Express these people do spend large amounts of money. Having more than a few red flags raised is completely expected. However, these individuals were asked to do basically impossible things to keep their accounts — despite American Express owing them money. That is right, in the process of trying to keep their accounts active (two specific and unique individuals in this case), they over paid their balances by very significant sums.

One party was able to keep their American Express account open after a great deal of work above and beyond what should be required. The story as I heard it was American Express basically said, we are kicking you out, and that individual proceeded to contact as many people as possible while faxing American Express literally every page of financial documents they had.

Based on that story, it leads me to suspect part of American Express’s problem is internal. A combination of layoff threats along with an ever increasing workload created by defaulting clients appears to have caused a precipitous drop off in American Express’s employee quality.

This paints a very grim picture for American Express’s future. Their high processing fees cost businesses money. Many will not accept AMEX if they don’t have to. At the same time, big spending limits along with excessive rewards motivate business owners to run all of their businesses expenses through their AMEX cards.

Would there be any rational reason for American Express to shed highly solvent customers right now? From what I see externally, my opinion is either it is a hell hole to work for right now or they are getting close to going under. May be both.