AB is out tonight with a story running in tomorrow’s edition about a comprehensive regulatory crackdown coming for credit card issuers.
Though the details are still being finalized, the overall aim is to create a uniform account management structure in an industry that, in the absence of strict regulatory and accounting rules, has developed a broad range of practices. Among the areas where regulators are expected to demand changes are credit line management, over-limit accounts, workout requirements, and accounting for settlements.
The standards are also expected to set new requirements for loan-loss reserves, specifying the amount banks must carry against accounts where borrowers are current, but also requiring institutions to hold reserves against the uncollectable portion of fee and finance charge income.
In credit line management, regulators are expected to require that banks make sure they understand the implications of changes in policies for setting credit lines, particularly the impact on credit losses.