A Good Decision from the OCC's Tim Long

by: Tom Brown November 14, 2008 | about stocks: AXP / COF / KBE    
Tom Brown

Tom Brown

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Regular readers know I don’t normally have much good to say about OCC bank regulator Tim Long. But Long was absolutely right this week to put the kibosh on the banking industry’s nutty proposal to defer losses on bad consumer credit card debt.

The plan, concocted by an odd alliance of bankers and consumer groups, was a one-two punch of dumb ideas. First, it would have let card lenders “forgive” certain delinquent card debt--then defer recognition of those losses for several years. Plus, delinquent consumers wouldn’t have had to pay tax on the income they’d have realized as a result of the debt forgiveness.

A harebrained, soak-the-taxpayers accounting jury-rig if there ever was one, in other words. I can’t think of anything to justify the scheme. For starters, there’s zero accounting rationale for it. Just the reverse: it would have obfuscated rather than clarify, and would have dragged out current problems rather than properly reflect them. On top of that, the plan would have been a tax giveaway to people who don’t deserve one. Other than that, a great idea!

So kudos to Tim Long for torpedoing the plan. I admit I’ve been skeptical of how regulators would react to the current mess. But if Long’s decision is anything to go by, they’ve learned a thing or two since the early 1990s.

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This article has 3 comments:

  •  
    Nov 14 03:15 PM
    Keep pumping out the articles, Tom, and hope nobody remembers the trash heap of predictions you have made about the financials over the last year.

    Your miss to hit ratio has been nothing short of 9 to 1. It is ridiculous.

    Reply | Link to Comment
  •  
    Nov 14 03:38 PM
    You are absolutely right. It was nothing more than a creditor sweetheart deal wrapped in the guise of being a favor for consumers.

    getoutofdebt.org/4213/...
    Reply | Link to Comment
  •  
    Nov 15 08:52 AM
    Aw, darn... I was thinking after my mortgage balance was cut in half and my credit card debt was wiped out I could cut back on this whole work thing... maybe downshift to a nice Wal mart job while I live in my McMansion. Come on, taxpayers, where are your hearts?
    Reply | Link to Comment
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