[Federal Register Volume 60, Number 162 (Tuesday, August 22, 1995)]
[Notices]
[Pages 43647-43649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20701]



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DEPARTMENT OF THE TREASURY


Study and Report on the Consumer and Small Business Credit System

AGENCY: Department of the Treasury.

ACTION: Request for comment.

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SUMMARY: The Department of the Treasury (Treasury) requests comment 
regarding the processes, and the effect of Federal laws on those 
processes, by which credit is made available for consumers and small 
businesses. This request for comment is issued in connection with a 
study required by the Riegle Community Development and Regulatory 
Improvement Act of 1994.

DATES: Comments should be submitted by September 12, 1995.

ADDRESSES: Comments should be directed to: Gordon Eastburn, Director, 
Office of Policy Planning and Analysis, Department of the Treasury, 
room 3025, 1500 Pennsylvania Avenue, NW., Washington, DC 20220, 
Attention: Consumer Credit Study.

FOR FURTHER INFORMATION CONTACT:
Gordon Eastburn, Director, Office of Policy Planning and Analysis, 
(202) 622-2730.

[[Page 43648]]


SUPPLEMENTARY INFORMATION:

Background

    Section 330 of the Riegle Community Development and Regulatory 
Improvement Act, Pub. L. No. 103-225, 108 Stat. 2160, 2231 (1994) (the 
CDRI Act), requires the Secretary of the Treasury (the Secretary) to 
conduct a study of the process by which credit is made available to 
consumers and small businesses. The study is to be conducted in 
consultation with the Board of Governors of the Federal Reserve System 
(FRB), the Administrator of the Small Business Administration (SBA), 
the Secretary of Housing and Urban Development (HUD), the Office of the 
Comptroller of the Currency (OCC), the Office of Thrift Supervision 
(OTS), the Federal Deposit Insurance Corporation (FDIC), and the 
National Credit Union Administration (NCUA).
    The purpose of the study is to identify procedures and Federal laws 
that have the effect of:
    (1) Reducing the amount of credit available (to consumers or small 
businesses) or the number of persons eligible for such credit;
    (2) Increasing the level of consumer inconvenience, cost, and time 
delays in connection with the extension of consumer and small business 
credit without corresponding benefit in protecting consumers, small 
businesses, or the safety and soundness of insured depository 
institutions; and
    (3) Increasing costs and burdens on insured depository 
institutions, insured credit unions, and other lenders, without 
corresponding benefit in protecting consumers, small businesses or the 
safety and soundness of insured depository institutions.
    At the conclusion of the study, the Secretary is to submit a report 
to the Congress describing his findings and conclusions and 
recommending any administrative actions or statutory changes that he 
determines to be appropriate.
    Finally, section 330 requires the Treasury to solicit comments from 
``consumers, representatives of consumers, insured depository 
institutions, insured credit unions, other lenders, and other 
interested parties.'' Id. The Treasury is, accordingly, issuing this 
request for comment in order to learn the views of interested parties 
with respect to the process by which consumers and small businesses 
seek and obtain credit.
Request for Comment

    Set forth below is a list of questions on which the Treasury 
specifically solicits commenters' views. The questions pertaining to 
the consumer and the small business credit systems are virtually 
identical but are separated into two discrete sections of this notice 
to facilitate responses from commenters who wish to respond only on one 
of the two topics.
    The Treasury also invites comment regarding any aspect of the 
process, including any Federal laws, by which credit is made available 
for consumers and small businesses. Since one important purpose of the 
report is to offer recommendations for administrative or legislative 
change, commenters are encouraged to be as specific as possible in 
suggesting improvements to the consumer and small business credit 
systems.
    Commenters are asked to identify the capacity or capacities (e.g., 
consumer representative, insured depository institution, small 
business, etc.) in which they are responding to this request. Moreover, 
commenters who choose to respond to one or more of the questions 
enumerated below are asked to identify the question by its number.

Questions on the Availability of Consumer Credit

    The consumer lending process is affected by many Federal banking 
laws and the regulations that implement them. While these laws are 
generally intended to facilitate consumers' access to credit, they may 
also have the effect of increasing lenders' costs which can, in turn, 
inhibit or restrict credit availability.
    Question (1). Please identify any consumer credit laws or 
implementing regulations that have a direct and significant effect on 
the consumer credit process. Examples include the items listed below. 
Commenters may also identify and comment on other Federal banking 
statutes and implementing rules not included on this list.
    a. The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) and 
Regulation B (12 CFR part 202);
    b. The Home Mortgage Disclosure Act (12 U.S.C. 2801 et seq.) and 
Regulation C (12 CFR part 203);
    c. The Fair Housing Home Loan Data System (12 CFR part 27) (applies 
only to national banks);
    d. The Real Estate Settlement Procedures Act (12 U.S.C. 2601) and 
Regulation X (24 CFR part 3500) (disclosure provisions);
    e. The Truth in Lending Act (15 U.S.C. 1601 et seq.) and Regulation 
Z (12 CFR part 226);
    f. The Fair Credit Reporting Act (15 U.S.C. 1681); and
    g. The National Flood Insurance Act of 1968 and the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4001 et seq.); 12 CFR part 22 (OCC); 
12 CFR part 339 (FDIC); 12 CFR part 760 (NCUA); 12 CFR 563.48 (OTS); 12 
CFR 208.8 (FRB).
    For each law or regulation identified in response to Question (1), 
commenters are invited to address the following questions:
    Question (2). What are the principal benefits of the law or 
regulation? What are its principal costs or burdens? Does the law or 
regulation impede consumers' access to credit? If so, how?
    Question (3). Does this law or regulation duplicate, or overlap 
with, any other Federal law or regulation in a significant way?
    Question (4). How could this law or regulation be changed to 
achieve its purpose in a way that is less costly or burdensome?
    Lenders also adopt policies and establish procedures that are not 
required by statute or regulation but that nonetheless may have 
important effects on credit availability. Examples include the location 
of a lender's branches, its underwriting policies and procedures, and 
the ways in which it makes information about credit available to 
consumers.
    Question (5). Please identify any significant non-statutory, non-
regulatory policies or procedures used by lenders that impede the 
process of obtaining consumer credit or that limit or restrict consumer 
credit availability.
    Question (6). Can the policy or procedure be modified to achieve 
the lender's objectives in a way that eliminates or reduces the 
restriction on consumer credit availability? If so, how?
    Question (7). Are consumers adequately informed, through 
advertising or other means, about the availability of financial 
products and services? If not, please identify ways in which the flow 
of information to consumers could be improved.
    There are other features of the overall Federal regulatory scheme 
that may affect credit availability. For example, the supervisory 
practices of the agencies that regulate lending institutions may have 
an impact on lending processes.
    Question (8). Please identify any other aspects of the government's 
administration of Federal laws, regulations, or programs, or its 
oversight of the lending process, that limit or restrict the 
availability of credit to consumers. Include any specific suggestions 
for improvement in the way the agencies or departments involved in this 
study, as described above, manage their statutory responsibilities.

[[Page 43649]]


Questions on the Availability of Small Business Credit

    Similarly, the small business lending process is affected by many 
Federal banking laws and the regulations that implement them. While 
these laws are generally intended to promote the safety and soundness 
of financial institutions and a competitive, efficient banking system, 
they may also have the effect of increasing lenders' costs or 
preventing consideration of new, but effective, credit delivery 
vehicles. These results can inhibit or restrict credit availability.
    Question (9). Please identify any laws or implementing regulations 
that have a direct and significant effect on the small business credit 
process. Examples include the items listed below; commenters may also 
identify and comment on other Federal banking statutes and implementing 
rules not included on this list.
    a. Lending Limits (12 U.S.C. 84) and 12 CFR part 32 (OCC); 12 CFR 
563.93 (OTS);
    b. Leasing (12 U.S.C. 24(Seventh)), (12 U.S.C. 24(Tenth)); 12 CFR 
part 23 (OCC);
    c. National Flood Insurance Act of 1968 and the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4001 et seq.); 12 CFR part 22 (OCC); 
12 CFR part 339 (FDIC); 12 CFR part 760 (NCUA); 12 CFR 563.48 (OTS); 12 
CFR 208.8 (FRB);
    d. Real Estate Lending Guidelines (12 U.S.C. 1828o; 12 CFR part 34, 
subpart D (OCC); 12 CFR part 208, subpart C (FRB); 12 CFR part 365 
(FDIC); 12 CFR 563.101 (OTS); and
    e. Real Estate Appraisals (12 U.S.C. 3331; 12 CFR part 34, subpart 
C (OCC); 12 CFR part 225 (FRB); 12 CFR part 323 (FDIC); 12 CFR parts 
545, 563, and 564 (OTS).
    For each law or regulation identified in response to Question (9), 
commenters are invited to address the following questions:
    Question (10). What are the principal benefits of the law? What are 
its principal costs or burdens? Does the law or regulation impede small 
businesses' access to credit? If so, how?
    Question (11). Does this law or regulation duplicate, or overlap 
with, any other Federal law or regulation in a significant way?
    Question (12). How could this law or regulation be changed to 
achieve its purpose in a way that is less costly or burdensome?
    Lenders also adopt policies and establish procedures that are not 
required by statute or regulation but that nonetheless may have 
important effects on credit availability. Examples include the location 
of a lender's branches, its underwriting policies and procedures, and 
the ways in which it makes information about credit available to 
consumers.
    Question (13). Please identify any significant non-statutory, non-
regulatory policies or procedures used by lenders that impede the 
process of obtaining small business credit or that limit or restrict 
small business credit availability.
    Question (14). Can the policy or procedure be modified to achieve 
the lender's objectives in a way that eliminates or reduces the 
restriction on small business credit availability? If so, how?
    Question (15). Are small businesses adequately informed, through 
advertising or other means, about the availability of financial 
products and services? If not, please identify ways in which the flow 
of information to small businesses could be improved.
    There are other features of the overall Federal regulatory scheme 
that may affect credit availability. For example, the supervisory 
practices of the agencies that regulate lending institutions may have 
an impact on lending processes.
    Question (16). Please identify any other aspects of the 
government's administration of Federal laws, regulations, or programs, 
or its oversight of the lending process, that limit or restrict the 
availability of credit to small businesses. Include any specific 
suggestions for improvement in the way the agencies or departments 
involved in this study, as described above, manage their statutory 
responsibilities.
    Question (17). What specific revisions to the supervisory practices 
of the Federal banking agencies would allow lending institutions 
greater flexibility in managing the risks of small business lending 
(e.g., expanding existing options for reviewing small business loans on 
a portfolio performance basis, rather than an individual loan basis).

    Dated: August 11, 1995.
Richard S. Carnell,
Assistant Secretary of the Treasury.
[FR Doc. 95-20701 Filed 8-21-95; 8:45 am]
BILLING CODE 4810-25-M