American Express (NYSE:AXP) has become the latest victim -- for lack of a better word -- of a credit market thrown completely upside down in the past few months.

Just as Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) did, AmEx gained approval to become a bank-holding company. That means it'll be able to raise deposits and enjoy a source of cheap, stable funding. It'll also be eligible to take part in the government's $700 billion bailout plan, and it'll gain better access to the Federal Reserve's discount lending window, which essentially serves as a lender of last resort.

A couple of thoughts are probably whizzing through investors' minds this morning:

  • Great! AmEx took pre-emptive measures to ensure it'll ride out the storm. Good for them!
  • Huh? I thought AmEx was one of the stronger, more enviable, Buffett-blessed financials out there! Now it might need access to bailout funds? Man, maybe things are quite a bit worse than we thought …

Both are probably legitimate points. Even if AmEx doesn't need a penny of help from the Treasury, why sit back as competitors gorge on the honey pot and line their balance sheets with government funds? If anything, becoming a bank-holding company just gives an already strong AmEx an additional safety net. No qualms there.

Then again, the move also highlights just how frenzied the credit markets have become lately. As demand for anything short of U.S. Treasuries ground to a halt, even creditworthy companies such as AmEx needed to devise a plan B. When fear takes control of the markets, credit ratings and solid reputations don't mean anything; people just want to bury their heads under their pillows and wait out the storm. That's a daunting position to face if your company relies on lending markets, as AmEx did.  

Developments like this emphasize AmEx's two-pronged dilemma in the year ahead. Consumers are almost certain to pare back spending. Since AmEx issues credit -- unlike Visa (NYSE:V) or MasterCard (NYSE:MA) -- it's going to have to navigate that pullback with an equally challenging hunt for capital, even if that means shouldering the stigma of becoming a member of the bailout crowd.

Crazy times we're living in.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. American Express is a Motley Fool Inside Value pick. The Fool owns shares of American Express and has a disclosure policy.