Amex’s Credit Rating Lowered

American Express Co. suffered another image blow Monday when Moody’s Investors Service lowered the rating on $7 billion of its debt, citing problems with its credit and lending businesses.

The charge card and travel giant has stumbled because of the recession’s impact on customers and record-keeping violations at its Optima credit card division.

American Express last month took a $265-million charge against third-quarter earnings, including $155 million in new reserves to pay for losses because of bad credit. The company’s profit fell more than 90% in the period.

The reduction in the long-term debt rating for American Express and several subsidiaries was Moody’s first of the 141-year-old company, known for its travelers’ checks and green, gold and platinum charge cards. Standard & Poor’s Corp. in July lowered its rating on American Express’ long-term debt because of turmoil at its Shearson Lehman Bros. securities unit.

Moody’s said its rating drop was based on “significant asset quality problems” at the company’s Travel Related Services unit that “could continue for some time.”

Also, Moody’s said the TRS unit “faces greater competitive challenges in its core domestic card business, and these challenges could put ongoing pressure on profits.”