Alert November 18, 2008

OCC Denies Industry Credit Card Borrower Workout Request

The OCC denied an industry request to test a new workout program for credit card debtors. The Financial Services Roundtable and the Consumer Federation of America requested that the OCC allow banks to provide workout programs for borrowers permitting repayment of less than the full amount while deferring the loss recognition and income reporting. The OCC explained that (1) the proposal was imprudent because the program defers timely recognition of loss and (2) the OCC maintains a policy against banks attempting long-term recoveries while assets deemed uncollectible have not been accounted for as charge offs and reported as losses. Click here for the OCC’s response.