JPMorgan: Credit card rules could mean big losses By MADLEN READ The Federal Reserve's proposed rules for credit card lenders could lead to the banking industry to lose at least $10.6 billion in interest annually, JPMorgan Chase & Co. said in a letter to regulators, citing a study. In May, the Federal Reserve and other regulators proposed steps to end what they called "unfair and deceptive" practices in the credit card industry. The rules aim to protect people from having their interest rates raised arbitrarily, among other practices. In a letter sent Monday to the Fed's board of governors, the Office of Thrift Supervision and National Credit Union Administration, JPMorgan's Chase Bank subsidiary said the proposed regulation, if finalized, "is likely to have profound effects on Chase's operations and financial results." The bank also said the proposal will negatively affect the credit card asset-backed securities market by reducing the amount of secondary market capital, and make credit less available to customers. Chase cited data collected from a group of banks, including Chase itself, on a confidential basis by the law firm Morrison & Foerster LLP. Morrison & Foerster could not comment on the data Tuesday, or on how many banks participated. The cumulative impact for the participating banks is at least $10.6 billion in annualized interest lost, Chase said in its letter, signed by Associate General Counsel Andrew T. Semmelman. The bank said those industry losses would likely result in a nearly 12 percent increase in annual percentage rates to an average of 16.58 percent; a $1.1 trillion reduction in total credit lines to consumers; and tighter standards that would stop $11 billion in new accounts from being booked each year. In addition to restricting rate hikes on cards in certain situations, the Fed's proposed rules aim to limit the imposition of inadequate time restraints on consumers and the practice of allocating all payments to balances with lower interest rates when a borrower has balances with different rates. On Monday, the chairman of the Senate's investigations subcommittee said he supports the Federal Reserve's proposed restrictions on credit card practices -- but that he believes there should be more. Sen. Carl Levin, D-Mich., wrote in a 13-page letter to the Fed that it should expand its rules to end or restrict such practices as charging interest for debt paid on time; interest on transaction fees; fees levied on consumers paying their bills on time; and billing amounts that force consumers to pay four or five times their original debt. Back in March, JPMorgan Chase, at the behest of the U.S. government, bought the ailing investment bank Bear Stearns Cos. when it appeared to be near collapse.
pssssssssshaw.. 10 billion. peanuts. they can just make up a new gse - call it something cute like bobby sue or micky dew - package the debt and make a nice transaction fee for their good work. sell the debt to a few other entities/countries/taxpayers(bagholders). no big deal..