Banks Urged To Be Careful With Cards

A federal banking regulator urged large banks Thursday to perform basic research before mailing preapproved credit card applications, such as determining if the potential borrower is creditworthy.

The Comptroller of the Currency, the agency which regulates 2,800 national banks, issued an advisory letter reminding banks not to ignore basic lending controls as they aggressively compete in the fast-growing credit card business.

Comptroller Eugene Ludwig said there’s no fundamental threat to banks from consumer lending at this time, since banks are earning near-record profits and have large reserves against potential losses. Nevertheless, Ludwig said “there are some problems with credit card lending that neither regulators nor the banking industry can ignore.”