[Federal Register Volume 80, Number 228 (Friday, November 27, 2015)]
[Rules and Regulations]
[Pages 73947-73949]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30091]


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FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Docket No. R-1520]
RIN 7100 AE-36

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


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). The Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 
amended TILA by requiring that the dollar threshold for exempt consumer 
credit transactions be adjusted annually by the annual percentage 
increase in the Consumer Price Index for Urban Wage Earners and 
Clerical Workers (CPI-W). If there is no annual percentage increase in 
the CPI-W, the Board and Bureau will not adjust this exemption 
threshold from the prior year. Based on the annual percentage decrease 
in the CPI-W as of June 1, 2015, the exemption threshold will remain at 
$54,600 through December 31, 2016.
    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 this issue of the Federal Register.

DATES: This final rule is effective January 1, 2016.

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: James Wylie, 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 
(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

[[Page 73948]]

with these provisions of the Dodd-Frank Act along with a similar final 
rule amending Regulation M (which implements the Consumer Leasing Act) 
(collectively, the Board Final Threshold Rules).\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 section 1100E, 124 Stat. 1376 (2010).
    \3\ 76 FR 18354 (Apr. 4, 2011); 76 FR 18349 (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.\6\ As stated in the Board Final Threshold Rules, if there is no 
annual percentage increase in the CPI-W, the Board and Bureau will not 
adjust the exemption threshold from the prior year.\7\
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    \6\ See comments 3(b)-1 in Supplements I of 12 CFR part 226 and 
12 CFR part 1026.
    \7\ 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (``[A]n annual period 
of deflation or no inflation would not require a change in the 
threshold amount.'').
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II. Adjustment and Commentary Revision

    Effective January 1, 2016, the exemption threshold amount remains 
at $54,600. This is based on the CPI-W in effect on June 1, 2015, which 
was reported on May 22, 2015. 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. Because the 
CPI-W reported on May 22, 2015 reflects a 0.8 percent decrease in the 
CPI-W from April 2014 to April 2015, the Board and the Bureau are not 
adjusting the exemption threshold amount. The Board and the Bureau are 
revising the commentaries to their respective regulations to add new 
comment 3(b)-1.vii to state that, from January 1, 2016 through December 
31, 2016, the threshold amount is $54,600. These revisions are 
effective January 1, 2016.

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.\8\ The amendment in this notice is technical 
and applies the method previously set forth in the Board Final 
Threshold Rules.\9\ 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.
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    \8\ 5 U.S.C. 553(b)(B).
    \9\ See supra note 7.
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Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\10\ 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.
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    \10\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\11\ the 
agencies reviewed this final rule. No collections of information 
pursuant to the Paperwork Reduction Act are contained in the final 
rule.
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    \11\ 44 U.S.C. 3506; 5 CFR part 1320.
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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:

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, section 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, 
paragraph 1.vii is added to read as follows:

Supplement I to Part 226--Official Staff Interpretations

* * * * *

Subpart A--General

* * * * *



[[Page 73949]]

Section 226.3--Exempt Transactions

* * * * *
    3(b) Credit over applicable threshold amount.
    1. * * *
    vii. From January 1, 2016 through December 31, 2016, the threshold 
amount is $54,600.
* * * * *

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
3. The authority citation for part 1026 continues to read as follows:

    Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.


0
4. In Supplement I to part 1026, under Section 1026.3--Exempt 
Transactions, under 3(b) Credit Over Applicable Threshold Amount, 
paragraph 1.vii 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. * * *
    vii. From January 1, 2016 through December 31, 2016, the threshold 
amount is $54,600.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, November 18, 2015.
Robert deV. Frierson,
Secretary of the Board.
    Dated: September 22, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2015-30091 Filed 11-25-15; 8:45 am]
 BILLING CODE: 6210-01-P; 4810-AM-P