WASHINGTON, Nov 12 (Reuters) - A U.S. banking regulator on Wednesday rejected a request to let large banks forgive some of the credit card payments owed by heavily indebted Americans who would otherwise file for bankruptcy or default.

The Office of the Comptroller of the Currency (OCC) said that while it supports efforts by U.S. banks to work with distressed borrowers, the agency could not approve any plan that would let banks defer the timely recognition of losses.

In a rare collaboration, the change was sought by the Consumer Federation of America, a pro-consumer group, and the Financial Services Roundtable, which represents the biggest U.S. banks, insurors and investment services companies.

They asked the OCC to let large U.S. banks test a program to accept concessions from borrowers who are so far in debt that they do not qualify for currently available repayment plans. Specifically, the test would let lenders forgive a portion of the amount owed and require the borrower repay the remainder over time.

Currently, U.S. lenders offer programs that reduce payments, interest rates and penalties for delinquent consumers but not significant reductions in the principal debt owed, according to the Financial Services Roundtable and the Consumer Federation of America.

The OCC said the proposal clashed with fundamental bank accounting principles requiring a prompt recognition of bad debts to maintain public confidence.

"Our longstanding policy is that banks are not allowed to attempt long-term recoveries while assets deemed uncollectible have not been accounted for as charge-offs and reported as losses," Timothy Long, the OCC's senior deputy comptroller, said in a letter to the two groups.

"We appreciate the challenges faced by troubled borrowers in the current environment," Long said. "At the same time, I am sure you appreciate our interest in ensuring that banks maintain accurate and transparent financial statements and records."

The OCC, which regulates so-called national or large banks, also noted that U.S. banks had other tools and programs to offer struggling customers.

Consumer debt such as credit card and auto loans are widely expected to be the next trouble spot for banks that are already reeling from subprime mortgage losses and a global credit freeze. U.S. credit card losses have increased this year to a range of 5.0 percent to 7.0 percent of a loan portfolio, and could set record highs in 2009, according to Fitch Ratings. Keywords: FINANCIAL/CREDITCARDS (Reporting by Julie Vorman; julie.vorman@reuters.com, +1 202 898 8467)

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