CreditSights Inc. says Providian is desperately seeking funds from small time depositors by offering above-market rates. In a report released yesterday the credit research firm says it views Providian’s action as an unsafe and unsound activity that may cause the regulators to exercise their blitz powers. The company strongly warned investors to avoid Providian bonds. CreditSights said that Providian dominates the “Rates & Yields” tables that appear in newspapers nationwide, as well as on popular rate information Websites, such as bankrate.com. For jumbo CDs and money markets, CreditSights said Providian offered eight of the 12 highest rates available nationally, in the table which ran in Sunday’s New York Times. The research company says since institutional investors are bailing out of the company’s paper in droves, Providian needs to replace that funding or risk raising cash from card assets of questionable value on its balance sheet. CreditSights accuses the company of taking advantage of the FDIC coverage on deposits less than $100,000 to garner the funds. It believes Providian is engaging in an unsafe or unsound practice by advertising above-market rates to individual depositors and thus endangering the integrity of the bank insurance funds. This could force the regulators to make Providian operate under undercapitalized rules despite capital measures that are higher than the minimum. CreditSights says if this materializes, the company will not be able to offer rates higher than the national average and funding its liabilities will become even more difficult. Providian recently announced it is cutting jobs, suspending dividends, withdrawing earnings guidance, and is seeking to sell-off about $3 billion of its credit card portfolio. For complete details on Providian?s latest earnings report visit CardData ([www.carddata.com]).