Regulators nix credit card debt forgiveness plan

Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt.

The Office of the Comptroller of the Currency alone the appeal for a appropriate affairs that would acquiesce as abundant as 40% of acclaim agenda debt to be forgiven for consumers who don't authorize for absolute claim plans.

An unusual alliance of financial industry interests and consumer advocates, represented by the Financial Services Roundtable and the Consumer Federation of America, made the request to the Treasury Department agency on Oct. 29. It demonstrated the urgency of the situation in a deepening economic crisis: consumers — even those with strong credit records — defaulting at high levels on their credit cards, while banks battered by the credit crisis bleed tens of billions from the losses.

An agency said the government objects to allowing banks to defer losses for several years on the forgiven debt, as would occur in accounting by lenders under the special program.

The biggest credit card lenders include Discover Financial Services, Bank of America, Citigroup, JPMorgan Chase, Capital One Financial, American Express and HSBC Holdings.

Credit card charge-off rates, balances written off as unpaid, rose to 6.8% in August, up 48% from a year earlier, according to Moody's Investors Service.

Americans are weighed down by about $900 billion in credit card debt, according to the latest available Federal Reserve figures.