Circular
Guidance on Account Management and Loss Allowance Practices for Credit Card Lending
January 14, 2003
Circular No. 11492

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

To State Member Banks and Bank Holding Companies and Others Concerned in the Second Federal Reserve District:

In a press release, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office of Thrift Management issued guidance governing account management and loss allowance practices for credit card lending.

The guidance applies to all banks and thrifts. The agencies developed the guidance in response to recent examinations that disclosed a number of inappropriate account management, risk management, and loss allowance practices.

The agencies' objective in issuing the guidance is to assist financial institutions in conducting credit card lending activities in a safe and sound manner, while meeting the needs of their customers. The guidance outlines the supervisory agencies' expectations for prudent risk management, income recognition, and loss allowance practices.

The interagency guidance is attached.

Questions on this matter may be directed to your relationship specialist at this Bank.