[Federal Register Volume 77, Number 225 (Wednesday, November 21, 2012)]
[Rules and Regulations]
[Pages 69736-69738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27993]


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FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Docket No. 1450]
RIN 7100-AD94

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026

[Docket No. CFPB-2012-0043]


Truth in Lending (Regulation Z)

AGENCIES:  Board of Governors of the Federal Reserve System (Board); 
and Bureau of Consumer Financial Protection (Bureau).

ACTION: Final rules, official interpretations and commentary.

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SUMMARY: The Board and the Bureau are publishing final rules amending 
the official interpretations and commentary for the agencies' 
regulations that implement the Truth in Lending Act (TILA). Effective 
July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) amended TILA by increasing the 
threshold for exempt consumer credit transactions from $25,000 to 
$50,000 and requiring that, on or after December 31, 2011, this 
threshold be adjusted annually by any annual percentage increase in the 
Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-
W). Accordingly, the exemption threshold was adjusted to $51,800 
effective January 1, 2012. Based on the annual percentage increase in 
the CPI-W as of June 1, 2012, the Board and the Bureau are adjusting 
the exemption threshold from $51,800 to $53,000, effective January 1, 
2013.
    Because the Dodd-Frank Act also requires similar adjustments in the 
Consumer Leasing Act's threshold for exempt consumer leases, the Board 
and the Bureau are making similar amendments to each of their 
respective regulations implementing the Consumer Leasing Act elsewhere 
in the Federal Register.

DATES: This final rule is effective January 1, 2013.

[[Page 69737]]


FOR FURTHER INFORMATION CONTACT: 
    Board: Vivian W. Wong, Counsel, Division of Consumer and Community 
Affairs, Board of Governors of the Federal Reserve System, at (202) 
452-3667; for users of Telecommunications Device for the Deaf (TDD) 
only, contact (202) 263-4869.
    Bureau: David Friend, Counsel, Office of Regulations, Bureau of 
Consumer Financial Protection, at (202) 435-7700.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 
2010 (Dodd-Frank Act) increased the threshold in the Truth in Lending 
Act (TILA) for exempt consumer credit transactions \1\ from $25,000 to 
$50,000, effective July 21, 2011.\2\ In addition, the Dodd-Frank Act 
requires that this threshold be adjusted annually for inflation by the 
annual percentage increase in the Consumer Price Index for Urban Wage 
Earners and Clerical Workers (CPI-W), as published by the Bureau of 
Labor Statistics. In April 2011, the Board issued a final rule amending 
Regulation Z (which implements TILA) consistent with these provisions 
of the Dodd-Frank Act.\3\
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    \1\ Although consumer credit transactions above the threshold 
are generally exempt, loans secured by real property or by personal 
property used or expected to be used as the principal dwelling of a 
consumer and private education loans are covered by TILA regardless 
of the loan amount. See 12 CFR 226.3(b)(1)(i) and 12 CFR 
1026.3(b)(1)(i).
    \2\ Public Law 111-203 Sec.  1100E, 124 Stat. 1376 (2010).
    \3\ 76 FR 18354 (Apr. 4, 2011).
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    Title X of the Dodd-Frank Act transferred rulemaking authority for 
a number of consumer financial protection laws from the Board to the 
Bureau, effective July 21, 2011. In connection with this transfer of 
rulemaking authority, the Bureau issued its own Regulation Z 
implementing TILA in an interim final rule, 12 CFR part 1026 (Bureau 
Interim Final Rule).\4\ The Bureau Interim Final Rule substantially 
duplicated the Board's Regulation Z, including the revisions to the 
threshold for exempt transactions made by the Board in April 2011. 
Although the Bureau has the authority to issue rules to implement TILA 
for most entities, the Board retains authority to issue rules under 
TILA for certain motor vehicle dealers covered by section 1029(a) of 
the Dodd-Frank Act, and the Board's Regulation Z continues to apply to 
those entities.\5\
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    \4\ 76 FR 79768 (Dec. 22, 2011).
    \5\ Section 1029(a) of the Dodd-Frank Act states: ``Except as 
permitted in subsection (b), the Bureau may not exercise any 
rulemaking, supervisory, enforcement, or any other authority * * * 
over a motor vehicle dealer that is predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both.'' 12 U.S.C. 5519(a). Section 1029(b) of the 
Dodd-Frank Act states: ``Subsection (a) shall not apply to any 
person, to the extent that such person (1) provides consumers with 
any services related to residential or commercial mortgages or self-
financing transactions involving real property; (2) operates a line 
of business (A) that involves the extension of retail credit or 
retail leases involving motor vehicles; and (B) in which (i) the 
extension of retail credit or retail leases are provided directly to 
consumers; and (ii) the contract governing such extension of retail 
credit or retail leases is not routinely assigned to an unaffiliated 
third party finance or leasing source; or (3) offers or provides a 
consumer financial product or service not involving or related to 
the sale, financing, leasing, rental, repair, refurbishment, 
maintenance, or other servicing of motor vehicles, motor vehicle 
parts, or any related or ancillary product or service.'' 12 U.S.C. 
5519(b).
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    Section 226.3(b)(1)(ii) of the Board's Regulation Z and Sec.  
1026.3(b)(1)(ii) of the Bureau's Regulation Z, and their accompanying 
commentaries, provide that the exemption threshold will be adjusted 
annually effective January 1 of each year based on any annual 
percentage increase in the CPI-W that was in effect on the preceding 
June 1. Any increase in the threshold amount will be rounded to the 
nearest $100 increment. For example, if the annual percentage increase 
in the CPI-W would result in a $950 increase in the threshold amount, 
the threshold amount will be increased by $1,000. However, if the 
annual percentage increase in the CPI-W would result in a $949 increase 
in the threshold amount, the threshold amount will be increased by 
$900. See comments 3(b)-1 in Supplements I of 12 CFR part 226 and 12 
CFR part 1026.

II. Adjustment and Commentary Revision

    Effective January 1, 2013, the adjusted exemption threshold amount 
is $53,000. This adjustment is based on the CPI-W index in effect on 
June 1, 2012, which was reported on May 15, 2012. The Bureau of Labor 
Statistics publishes consumer-based indices monthly, but does not 
report a CPI change on June 1; adjustments are reported in the middle 
of the month. The CPI-W is a subset of the CPI-U index (based on all 
urban consumers) and represents approximately 28 percent of the U.S. 
population. The adjustment reflects a 2.4 percent increase in the CPI-W 
from April 2011 to April 2012 and is rounded to the nearest $100 
increment. Accordingly, the Board and the Bureau are revising the 
commentaries to their respective regulations to add new subparagraph 
3(b)-1.iv to state that, from January 1, 2013 through December 31, 
2013, the threshold amount is $53,000. These revisions are effective 
January 1, 2013.

III. Administrative Law Matters

Administrative Procedure Act

    Under the Administrative Procedure Act, notice and opportunity for 
public comment are not required if the Board and the Bureau find that 
notice and public comment are impracticable, unnecessary, or contrary 
to the public interest. 5 U.S.C. 553(b)(B). This annual adjustment is 
required by statute. The amendment in this notice is technical and non-
discretionary, and it applies the method previously established in the 
agencies' regulations for determining adjustments to the exemption 
threshold. For these reasons, the Board and the Bureau have determined 
that publishing a notice of proposed rulemaking and providing 
opportunity for public comment are unnecessary. Therefore, the 
amendments are adopted in final form.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required. 5 U.S.C. 
603 and 604. As noted previously, the agencies have determined that it 
is unnecessary to publish a general notice of proposed rulemaking for 
this joint final rule. Accordingly, the RFA's requirements relating to 
an initial and final regulatory flexibility analysis do not apply.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320), the agencies reviewed this final rule. No 
collections of information pursuant to the Paperwork Reduction Act are 
contained in the final rule.

List of Subjects

12 CFR Part 226

    Advertising, Consumer protection, Federal Reserve System, Reporting 
and recordkeeping requirements, Truth in Lending.

12 CFR Part 1026

    Advertising, Consumer protection, Credit, Credit unions, Mortgages, 
National banks, Reporting and recordkeeping requirements, Savings 
associations, Truth in Lending.

Board of Governors of the Federal Reserve System

Text of Final Revisions

    For the reasons set forth in the preamble, the Board amends 
Regulation Z, 12 CFR part 226, as set forth below:

[[Page 69738]]

PART 226--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 226 continues to read as follows:

    Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), and 
1639(l); Pub. L. 111-24 Sec.  2, 123 Stat. 1734; Pub. L. 111-203, 
124 Stat. 1376.


0
2. In Supplement I to part 226, under Section 226.3--Exempt 
Transactions, under 3(b) Credit over applicable threshold amount, new 
paragraph 1.iv is added to read as follows:

Supplement I to Part 226--Official Staff Interpretations

* * * * *

Subpart A--General

* * * * *

Section 226.3 Exempt Transactions

* * * * *
    3(b) Credit over applicable threshold amount.
    1. Threshold amount. * * *
    iv. From January 1, 2013 through December 31, 2013, the 
threshold amount is $53,000.
* * * * *

Bureau of Consumer Financial Protection

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends 
Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 1026 is revised to read as follows:

    Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 5511, 
5512, 5532, 5581; 15 U.S.C. 1601 et seq.


0
2. In Supplement I to part 1026, under Section 1026.3--Exempt 
Transactions, under 3(b) Credit over applicable threshold amount, new 
paragraph 1.iv is added to read as follows:

Supplement I to Part 1026--Official Interpretations

* * * * *

Subpart A--General

* * * * *

Section 1026.3 Exempt Transactions

* * * * *
    3(b) Credit over applicable threshold amount.
    1. Threshold amount. * * *
    iv. From January 1, 2013 through December 31, 2013, the 
threshold amount is $53,000.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, November 8, 2012.
Robert deV. Frierson,
Secretary of the Board.
    Dated: November 6, 2012.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2012-27993 Filed 11-20-12; 8:45 am]
BILLING CODE 6210-01-P; 4810-AM-P