Discover Financial Services is asking the Treasury Department to grant it bank holding company status, despite statements just a few weeks ago saying it would not do so. As part of the application, Discover is asking Treasury for an infusion of cash under the Capital Purchase Program.

Discover CEO David Nelmsthat participating in the Treasury program at the parent company level, rather that through its wholly-owned Delaware bank, will provide additional liquidity and "maximize [Discover's] strategic flexibility."

Discover did not say how much capital it requested from the Treasury.

As expected, the Federal Reserve Board approved a round of new regulations aimed a reigning in some credit card issuer practices deemed excessive by consumer groups and legislators. Thenew rules were approved December 18, but will not go into effect until July 2010, giving issuers 18 months to modify their internal systems to comply.

Among other things, the Fed's new riules require that issuers improve disclosures,  give consumers additional protection against "unfair or deceptive lending practices," ban most interest rate hikes for pre-existing balances, and ease payoff terms for cardholders.

A major concern for card issuers is that the change in rules on unfair or deceptive practices may retroactively expose banks to lawsuits under state laws that penalize those practices.

Consumer groups had asked the Fed to put the new regulation into effect as soon as possible after its adoption, while issuing banks sought a longer lead time to comply with the new requirements, noting that the time is needed to update their internal systems. The July 2010 deadline was seen as a victory for issuers.

Adoption of Reg Z will have little direct effect in acquiring banks or the payment industry, except to the extent the additional protections encourage increases in consumer card usage.

Sen. Charles Schumer (D-NY) has introduced the Fair Gift Card Act, a bill he says will protect consumers from unfair practices at the hands of gift card issuers. Among other things, the bill would prohibit gift card issuers from imposing a dormancy or service fee, unless the card has less than $5 remaining on it after 24 consecutive months of inactivity. Fees could not exceed $1 per month. The bill also requires that gift cards remain valid for five years.

Whlie there is almost no chance the Schumer legislation will make it into law in the current Congressional session, reintroduction in the new Congress, which takes office in January, is likely.

The Federal Deposit Insurance Corp. (FDIC) has ruled that many stored value cards, including cards issued by retailers, qualify as deposits when the funds that are represented on the cards are held by an insured financial institution.

The ruling by FDIC's general counsel, may protect holders of gift cards issued by retailers like Circuit City, which has filed for bankruptcy protection, but also extends to open loop cards that are issued by financial institutions themselves. The ruling said cards can be insured up to the full $250,000 FDIC limit and noted that in cases where cards are not registered to an owner, the bearer of the card will be considered to be the owner.