The Office of the Comptroller of the Currency (OCC) turned down a request from the Consumer Federation of America and the Financial Services Roundtable that it allow an experimental program whereby big credit card banks would have been allowed to forgive a portion of the principle owed without taking an immediate write-down. The write-down would have been delayed until the borrower completes a debt repayment plan or defaults on the plan’s terms.

In reply, the OCC declared that it strongly encourages national banks to work with distressed borrowers. However, the agency said it cannot approve a plan that defers the timely recognition of losses, since that would compromise the transparency and integrity of a bank’s financial reports and could lead to a loss of public confidence in the banking system.

The OCC also expressed some additional concerns about the proposal. “I must tell you,” Senior Deputy Comptroller Timothy Long wrote, “that I have concerns that the major lenders and credit counseling agencies referenced in your letter are failing to differentiate between working with distressed borrowers and a desire to simply acquire forbearance on loss recognition. In our view,” he said, “these are clearly two different matters.”