Federal Bank Regulators Reject Proposal To Forgive Credit Card Debts

November 13, 2008 8:38 a.m. EST

Washington, D.C. (AHN) - While the Treasury Department is willing to extend a helping hand to consumer credit card companies to unfreeze credit, federal bank regulators are close to the idea of forgiving credit card debts.

The Office of the Comptroller of the Currency on Wednesday said no to a request from the Financial Services Roundtable and Consumer Federation of America for a special program that would condone up to 40 percent of consumer credit card debts which would not qualify for existing repayment plans.

The two groups presented their request to the OCC on Oct. 29.

Following the decision of the OCC, the roundtable which represents over 100 large banks, brokerage firms and insurance companies, said it will continue to seek ways to help consumers find a solution to their mounting credit card payments, said Scott Talbott, senior vice president of the roundtable.

The OCC decision came just after Treasury Secretary Henry Paulson announced a major shift in the bailout program of the federal government from helping troubled companies to assisting firms engaged in extending credit to consumers.