Bankin’ Bits

Federal Reserve Release: Expansion of Consumer Protection Regulations

December 17, 2010 at 10:13 pm stinsonbanking Leave a comment

The Federal Reserve Board on December 13th proposed two rules that would expand the coverage of consumer protection regulations to credit transactions and leases of higher dollar amounts.

The proposed rules would amend Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) to implement a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Effective July 21, 2011, the Dodd-Frank Act requires that the protections of the Truth in Lending Act (TILA) and the Consumer Leasing Act (CLA) apply to consumer credit transactions and consumer leases up to $50,000, compared with $25,000 currently. This amount will be adjusted annually to reflect any increase in the Consumer Price Index.

TILA requires creditors to disclose key terms of consumer loans and prohibits creditors from engaging in certain practices with respect to those loans. Currently, consumer loans of more than $25,000 are generally exempt from TILA. However, private education loans and loans secured by real property (such as mortgages) are subject to TILA regardless of the amount of the loan.

The CLA requires lessors to provide consumers with disclosures regarding the cost and other terms of personal property leases. An automobile lease is the most common type of consumer lease covered by the CLA. Currently, a lease is exempt from the CLA if the consumer’s total obligation exceeds $25,000.

A link to the notices that will be published in the Federal Register are below.  Comments on the proposals must be submitted by the later of 30 days after publication in the Federal Register or February 1, 2011.

Regulation M notice: http://edocket.access.gpo.gov/2010/pdf/2010-31530.pdf

Regulation Z notice: http://edocket.access.gpo.gov/2010/pdf/2010-31529.pdf

(Press Release of the Federal Reserve)

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