The Office of the Comptroller of the Currency has dropped a plan to make it easier for national banks to protect collateral.

The proposal would have let a national bank exceed the limits on loans to an individual. But an institution first would have to prove it would be better off extending the additional credit rather than foreclosing on the collateral. Such loans would have had to be secured either by personal property or real estate.

OCC officials said they pulled the proposal Wednesday because they were concerned about deteriorating credit quality.

Also Wednesday, the Comptroller's Office clarified when national banks must recalculate individual lending limits. The agency said national banks must base their limits on capital and surplus levels held at the end of the most recent quarter.

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