Key questions and answers from the second quarter earnings call conducted by American Express Co. (AXP: chart) on July 21, 2008.

Meredith Whitney (Oppenheimer & Co.): Could you talk about the derivative impact of line reductions?

Kenneth Chenault: Clearly the reduction in line size impacts spending and that has a negative impact on spending. What we are certainly trying to do on a geographic basis is to be very targeted.

What we have been able to do is be very surgical against those customers that we believe based on our modeling have a higher risk. That is important both not only in setting up the models but making sure we have the right operational controls in place as far as our credit management is concerned.

Meredith Whitney (Oppenheimer & Co.): Is it too soon to tell when your competitors will cut lines to the same customers that you have?

Daniel Henry: We are continuing to learn as we go through this slow down. Every slow down is different and this has certainly been different than what we have seen in the past and we look to incorporate our learning as we make credit decisions.

We continue to see the big significance in geographies where housing prices have fallen the greatest but recently we have actually started to see greater impact in customers who were in that middle cycle band, generally it is customers with low FICO’s where you see the greatest impact and we are certainly seeing it there.

We are keeping a close eye on competitors and if we identify customers that we have a significantly higher open to buy than our competitors that is another spot where we are seeing added risk and we are reacting to that.

Some customers who are having temporary difficulties would be terrific long-term customers for the franchise and we want to make sure we acknowledge the credit actions we are taking to reduce near-term credit losses with the overall economics of the customer and a customer who could be of great value to us in the future.

Christopher Brendler (Stifel Nicolaus & Co.): Can you talk about the raise in the charge card business?

Daniel Henry: In the charge card business a lot of the provisioning takes place when the account goes past due. So the people who actually wrote off in the second quarter went past due in the third quarter of last year and that is when the bulk of the provision was set up.

We are actually seeing the percentage of customers going past due in the second quarter seasonally is always low but we also in the second quarter of 2008 are seeing the impact of lower spending as well as the impact of our credit adding.

Because we do not see the customers going past due in the second quarter we are not seeing a big pick up in the provision. Therefore provision for the charge cards increased only modestly only 3%. We are very comfortable with how we are handling charge card and where that provision is at this time.

Christopher Brendler (Stifel Nicolaus & Co.): Anything on the marketing side you have done to slow down the lending growth as well?

Daniel Henry: Marketing spend is obviously for acquisitions which would not have a quick near term impact on AR growth. It takes a little bit of time for customers to get their card and to spend and move into revolve.

We still are marketing at a healthy level across the company. You can see that we spent about the same that we did last year although we have shifted dollars to international and that is helping our spending levels there which are very good.

To the extent we spend less on marketing in the U.S. that will have some impact in terms of growth in the U.S. in addition to what is taking place in the economy but we want to shift our investment dollars to the place that has the best current opportunity. We still have very good opportunities in the U.S. as well except we are doing those on a more surgical basis.

Kenneth Chenault: We have got to be and are being more targeted in the U.S. but I would just emphasize the overall opportunities we have in international and B2B, G&S provide very strong growth opportunities.

It demonstrates the broadness and attractiveness of our business portfolio that we have areas in our business mix that in fact have a more conducive profile to some of the economic issues we are facing and we clearly are re-allocating some investments there.

Robert Napoli (Piper Jaffray): On market position and strategy, are you in a better position than you have been in the history of the company?

Kenneth Chenault: Without direct access to a demand deposit account it makes it difficult for us to offer a debit card. However, when one looks at the economics of our charge card products and in fact some of our lending products, we believe that we can meet the functional pay in full spending needs of those customers and prospects through our variety of card products at frankly more attractive economics than we could get with debit.