ARLINGTON, Va. – Neither regulators' increased interest in the quality of credit card accounts, nor the economic downturn in the prices of many major portfolio buyers, like MBNA, is likely to have much of an impact on the value of credit unions card portfolios, according to two players in the card market. Bank regulators have indicated they would be taking much closer looks at card banks' accounting and management practices and that card banks with a majority of accounts that the regulators consider subprime would be asked to increase their reserves. The stock market has also punished even healthier card banks. Even though MBNA is not a subprime lender, its stock dropped 50% in two weeks. But Steven Fuld, senior vice president with Kessler Financial, which facilitates MBNA's purchase of credit unions' card portfolios, denied that either increased regulatory scrutiny or a lower stock price would impact Kessler's interest in credit unions' cards. "Certainly if buying credit union card portfolios was a good idea before, it's even a better idea now," he said. He said Kessler Financial's interest in partnering with credit unions in their card offerings is a long-term strategic position, he added. Glen Lee, vice president of TNB Card Services, agreed that the card banks current situation would not change how they viewed credit card portfolios, either negatively or positively. Lee pointed out that the banks that are buying credit unions' card portfolios were not subprime marketers and would not be looking for a credit union card portfolio to "sweeten" their own holdings. He also said that the fundamental loyalty of credit union members for their credit union and their credit union cards were what the banks wanted to buy, and estimated that is an even stronger draw than even the quality of a credit union's card accounts. "If you look at credit union card holders, I think you will find that they have roughly the same demographics of card holders at large, at least card holders that are banked," he said. "If credit union card delinquencies are lower than card delinquencies overall, it's because of the loyalty of the holder for his or her credit union." Since TNB Card Services is an operation of TNB Bank, Lee also had a perspective on the regulator's actions overall, and he welcomed them. "I think it's good for the regulators to take a look at some of the things some of the subprime lenders were doing," he said, even as he acknowledged the entire industry was liable to suffer the increased regulatory scrutiny and market fall-out in the short term. Still, credit union card portfolios cannot help but benefit from the comparison with other card portfolios in a regulatory environment that puts a premium on quality, Fuld admitted. For example, federal regulators announced in mid-July that Capital One had, in their view, 40% of its card portfolio in subprime accounts, double the estimate the bank had previously made. Capital One was asked to boost its reserves because of the perceived weakness and credit union card portfolios are considered very strong. Yet it is hard to tell how that increased value will translate, or if it would translate, into an increased premium for a credit union's card portfolio, he said. "There are a lot of different factors that go into calculating a premium offer," he noted. [email protected]