Consumer Leasing (Regulation M), 86256-86260 [2016-28710]
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86256
Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
amount in effect at the time of
consummation.
5. Qualifying for exemption—
subsequent changes. A transaction does
not meet the condition for an exemption
under § 1026.35(c)(2)(ii) merely because
it is used to satisfy and replace an
existing exempt loan, unless the amount
of the new extension of credit is equal
to or less than the applicable threshold
amount. For example, assume a closedend loan that qualified for a
§ 1026.35(c)(2)(ii) exemption at
consummation in year one is refinanced
in year ten and that the new loan
amount is greater than the threshold
amount in effect in year ten. In these
circumstances, the creditor must
comply with all of the applicable
requirements of § 1026.35(c) with
respect to the year ten transaction if the
original loan is satisfied and replaced by
the new loan, unless another exemption
from the requirements of § 1026.35(c)
applies. See § 1026.35(c)(2) and
(c)(4)(vii).
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Dated: November 22, 2016.
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, November 21, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: November 7, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–28699 Filed 11–29–16; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 4810–AM–P
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R–1545]
RIN 7100 AE–56
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1013
[Docket No. CFPB–2016–0036]
RIN 3170–AA66
Consumer Leasing (Regulation M)
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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AGENCY:
The Board and the Bureau are
finalizing amendments to the official
SUMMARY:
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interpretations and commentary for the
agencies’ regulations that implement the
Consumer Leasing Act (CLA). The
Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank
Act) amended the CLA by requiring that
the dollar threshold for exempt
consumer leases 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. The final rule
memorializes this as well as the
agencies’ calculation method for
determining the adjustment in years
following a year in which there is no
annual percentage increase in the CPI–
W. Based on the CPI–W in effect as of
June 1, 2016, the exemption threshold
will remain at $54,600 through 2017.
The Dodd-Frank Act also requires
similar adjustments in the Truth in
Lending Act’s threshold for exempt
consumer credit transactions.
Accordingly, the Board and the Bureau
are adopting similar amendments to the
commentaries to each of their respective
regulations implementing the Truth in
Lending Act elsewhere in this issue of
the Federal Register.
DATES: This final rule is effective
January 1, 2017.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
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: Jaclyn Maier, Counsel, Office
of Regulations, Consumer Financial
Protection Bureau, 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 Consumer Leasing Act
(CLA) for exempt consumer leases, and
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, on and
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) (Board) and 12 CFR 1026.3(b)(1)(i)
(Bureau).
2 Public Law 111–203, section 1100E, 124 Stat.
1376 (2010).
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after December 31, 2011, these
thresholds 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 M (which
implements the CLA) consistent with
these provisions of the Dodd-Frank Act,
along with a similar final rule amending
Regulation Z (which implements TILA)
(collectively, the Board Final Threshold
Rules).3
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 M implementing the
CLA in an interim final rule, 12 CFR
part 1013 (Bureau Interim Final Rule).4
The Bureau Interim Final Rule
substantially duplicated the Board’s
Regulation M, including the revisions to
the threshold for exempt transactions
made by the Board in April 2011. In
April 2016, the Bureau adopted the
Bureau Interim Final Rule as final,
subject to intervening final rules
published by the Bureau.5 Although the
Bureau has the authority to issue rules
to implement the CLA for most entities,
the Board retains authority to issue rules
under the CLA for certain motor vehicle
dealers covered by section 1029(a) of the
Dodd-Frank Act, and the Board’s
Regulation M continues to apply to
those entities.6
3 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr.
4, 2011).
4 76 FR 78500 (Dec. 19, 2011).
5 81 FR 25323 (April 28, 2016).
6 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 DoddFrank 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 selffinancing 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 213.2(e)(1) of the Board’s
Regulation M and § 1013.2(e)(1) of the
Bureau’s Regulation M, 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.
They further provide that 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 $900.7 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. Since 2011, the Board and the
Bureau have adjusted the Regulation M
exemption threshold annually, in
accordance with these rules.
II. Commentary Revision
On August 4, 2016, the Board and the
Bureau published a proposed rule in the
Federal Register to memorialize the
calculation method used by the agencies
each year to adjust the exemption
threshold. See 81 FR 51400 (Aug. 4,
2016). The proposed commentary stated
that 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. The
proposed commentary further set forth
the calculation method the agencies
would use in years following a year in
which the exemption threshold was not
adjusted because there was no increase
in the CPI–W from the previous year. As
the Board and the Bureau discussed in
the proposal, the proposed calculation
method would ensure that the values for
the exemption threshold keep pace with
the CPI–W as contemplated by section
1100E(b) of the Dodd-Frank Act.
The comment period closed on
September 6, 2016. In response to the
proposal, the Board and the Bureau
received one comment from a consumer
supporting the proposal. The Board and
the Bureau are adopting the
commentary revisions as proposed, with
some minor clarifying amendments.
These changes will be effective on
January 1, 2017.
Specifically, the Board and the
Bureau are adopting comment 2(e)–9 as
proposed to move the text regarding the
7 See comments 2(e)–9 in supplements I of 12
CFR parts 213 and 1013.
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threshold amount that is in effect during
a particular period to a new comment
2(e)–11. The discussion of how the
agencies round the threshold
calculation will remain in comment
2(e)–9.
Furthermore, the Board and the
Bureau are adopting new comment 2(e)–
10 as proposed to provide that if the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year (i.e., the CPI–
W in effect on June 1 is either equal to
or less than the CPI–W in effect on June
1 of the previous year), the threshold
amount effective the following January
1 through December 31 will not change
from the previous year. As the Board
and the Bureau discussed in the
proposal, this position is consistent
with section 1100E(b) of the Dodd-Frank
Act, which states that the threshold
must be adjusted by the ‘‘annual
percentage increase’’ in the CPI–W
(emphasis added), and the position the
agencies have previously taken.8 Thus,
if the threshold in effect from January 1,
2019, through December 31, 2019, is
$55,500 and the CPI–W in effect on June
1 of 2019 indicates a 1.1 percent
decrease from the CPI–W in effect on
June 1, 2018, the threshold in effect for
January 1, 2020, through December 31,
2020, will remain $55,500.
Comment 2(e)–10 also provides that,
for the years after a year in which the
threshold did not change because the
CPI–W in effect on June 1 decreased
from the CPI–W in effect on June 1 of
the previous year, the threshold is
calculated by applying the annual
percentage change in the CPI–W to the
dollar amount that would have resulted,
after rounding, if the decreases and any
subsequent increases in the CPI–W had
been taken into account. Comment 2(e)–
10.i further states that, if the resulting
amount, after rounding, is greater than
the current threshold, then the
threshold effective January 1 the
following year will increase
accordingly.
For example, assume that the
threshold in effect from January 1, 2019,
through December 31, 2019, is $55,500
and that, due to a 1.1 percent decrease
from the CPI–W in effect on June 1,
2018, to the CPI–W in effect on June 1,
2019, the threshold in effect from
January 1, 2020, through December 31,
2020, remains at $55,500. If, however,
the threshold had been adjusted
downward to reflect the decrease in the
CPI–W over that time period, the
8 See, e.g., 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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threshold in effect from January 1, 2020,
through December 31, 2020, would have
been $54,900, after rounding. Further
assume that the CPI–W in effect on June
1, 2020, increased by 1.6 percent from
the CPI–W in effect on June 1, 2019. The
calculation for the threshold that will be
in effect from January 1, 2021, through
December 31, 2021, is based on the
impact of a 1.6 percent increase in the
CPI–W on $54,900, rather than $55,500,
resulting in a 2021 threshold of $55,800.
Furthermore, comment 2(e)–10.ii
states that, if the resulting amount
calculated, after rounding, is equal to or
less than the current threshold, then the
threshold effective January 1 the
following year will not change, but
future increases will be calculated based
on the amount that would have resulted,
after rounding. To illustrate, assume in
the example above that the CPI–W in
effect on June 1, 2020, increased by only
0.6 percent from the CPI–W in effect on
June 1, 2019. The calculation for the
threshold that will be in effect from
January 1, 2021, through December 31,
2021, is based on the impact of a 0.6
percent increase in the CPI–W on
$54,900. The resulting amount, after
rounding, is $55,200, which is lower
than $55,500, the threshold in effect
from January 1, 2020, through December
31, 2020. Therefore, the threshold in
effect from January 1, 2021, through
December 31, 2021, will remain
$55,500. However, the calculation for
the threshold that will be in effect from
January 1, 2022, through December 31,
2022, will apply the percentage change
in the CPI–W to $55,200, the amount
that would have resulted based on the
0.6 percent change from the CPI–W in
effect on June 1, 2019, after rounding, to
the CPI–W in effect on June 1, 2020.
III. 2017 Threshold
Based on the calculation method
detailed above, the exemption threshold
amount for 2017 remains at $54,600.
This is based on the CPI–W in effect on
June 1, 2016, which was reported on
May 17, 2016. 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 CPI–
W reported on May 17, 2016 reflects a
0.8 percent increase in the CPI–W from
April 2015 to April 2016. Because the
CPI–W decreased from April 2014 to
April 2015, the Board and the Bureau
are calculating the threshold based on
the amount that would have resulted
had this decrease been taken into
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account, which is $54,200. A 0.8
percent increase in the CPI–W applied
to $54,200 results in $54,600, which is
the same threshold amount for 2016.
Thus, the exemption threshold amount
that will be in effect for 2017 remains
at $54,600. The Board and the Bureau
are revising the commentaries to their
respective regulations to add new
comment 2(e)–11.viii to state that, from
January 1, 2017, through December 31,
2017, the threshold amount is $54,600.
These revisions are effective January 1,
2017.
IV. Regulatory Analysis
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.9 The 2017 threshold amount
for exempt consumer leases announced
in this rule, $54,600, is technical and
applies the calculation method set forth
elsewhere in this final rule, for which
notice and public comment were
provided.10 For these reasons, the Board
and the Bureau have determined that
publishing a notice of proposed
rulemaking and providing opportunity
for public comment for purposes of the
2017 threshold adjustment are
unnecessary. Therefore, the
amendments regarding the 2017
threshold amount for exempt consumer
leases are adopted in final form.
Bureau’s Dodd-Frank Act Section
1022(b)(2) Analysis
In developing the final rule, the
Bureau has considered potential
benefits, costs, and impacts.11 In
addition, the Bureau has consulted, or
offered to consult with, the prudential
regulators, the Securities and Exchange
Commission, the Department of Housing
and Urban Development, the Federal
Housing Finance Agency, the Federal
Trade Commission, and the Department
of the Treasury, including regarding
consistency with any prudential,
market, or systemic objectives
administered by such agencies.
The Bureau has chosen to evaluate the
benefits, costs and impacts of the final
95
U.S.C. 553(b)(B).
81 FR 51400 (Aug. 4, 2016).
11 Specifically, section 1022(b)(2)(A) calls for the
Bureau to consider the potential benefits and costs
of a regulation to consumers and covered persons,
including the potential reduction of access by
consumers to consumer financial products or
services; the impact on depository institutions and
credit unions with $10 billion or less in total assets
as described in section 1026 of the Act; and the
impact on consumers in rural areas.
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10 See
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rule against the current state of the
world, which takes into account the
current regulatory regime. The Bureau is
not aware of any significant benefits or
costs to consumers or covered persons
associated with the final rule relative to
the baseline. The Board previously
stated that if there is no annual
percentage increase in the CPI–W, then
the Board (and now the Bureau) will not
adjust the exemption threshold from the
prior year.12 The final rule memorializes
this in official commentary. The final
rule also clarifies how the threshold is
calculated for years after a year in which
the threshold did not change. The
Bureau believes that this clarification
memorializes the method that the
Bureau would be expected to use: This
method holds the threshold fixed until
a notional threshold calculated using
the Bureau’s methodology, taking into
account both decreases and increases in
the CPI–W, exceeds the actual
threshold. The Bureau requested, but
did not receive, comment on this point.
Thus, the Bureau concludes that the
final rule will not change the regulatory
regime relative to the baseline and will
create no significant benefits, costs, or
impacts.
The final rule will have no unique
impact on depository institutions or
credit unions with $10 billion or less in
assets as described in section 1026(a) of
the Dodd-Frank Act or on rural
consumers. The Bureau does not expect
this final rule to affect consumers’
access to credit.
Regulatory Flexibility Act
Board: An initial regulatory flexibility
analysis (IRFA) was included in the
proposal in accordance with section 3(a)
of the Regulatory Flexibility Act, 5
U.S.C. 601 et seq. (RFA). In the IRFA,
the Board requested comments on any
approaches, other than the proposed
alternatives, that would reduce the
burden on small entities. The RFA
requires an agency to prepare a final
regulatory flexibility analysis (FRFA)
unless the agency certifies that the rule
will not, if promulgated, have a
significant economic impact on a
substantial number of small entities. In
accordance with section 3(a) of the RFA,
the Board has reviewed the final
regulation. Based on its analysis, and for
the reasons stated below, the Board
believes that the rule will not have a
significant economic impact on a
substantial number of small entities.
1. Statement of the need for, and
objectives of, the final rule. The final
12 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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rule memorializes the calculation
method used by the Board each year to
adjust the exemption threshold in
accordance with section 1100E of the
Dodd-Frank Act. The final rule also
adopts the exemption threshold that
will apply from January 1, 2017,
through December 31, 2017, based on
the calculation method memorialized in
this final rule.
2. Summary of issues raised by
comments in response to the initial
regulatory flexibility analysis. The
Board did not receive any comments on
the initial regulatory flexibility analysis.
3. Small entities affected by the final
rule. Motor vehicle dealers that are
subject to the Board’s Regulation M and
offer consumer leases that may be
exempt from Regulation M under 12
CFR 213.2(e) would be affected. While
the total number of small entities likely
to be affected by the final rule is
unknown, the Board does not believe
the final rule will have a significant
economic impact on the entities that it
affects.
4. Recordkeeping, reporting, and
compliance requirements. The final rule
would not impose any recordkeeping,
reporting, or compliance requirements.
5. Significant alternatives to the final
revisions. The Board has not identified
any significant alternatives that would
reduce the regulatory burden on small
entities associated with this final rule.
Bureau: The RFA generally requires
an agency to conduct an initial
regulatory flexibility analysis (IRFA)
and a final regulatory flexibility analysis
(FRFA) of any rule subject to noticeand-comment rulemaking
requirements.13 These analyses must
describe the impact of the proposed and
final rules on small entities.14 An IRFA
or FRFA is not required if the agency
certifies that the rule will not have a
significant economic impact on a
substantial number of small entities.15
The Bureau also is subject to certain
additional procedures under the RFA
involving the convening of a panel to
13 5
U.S.C. 601 et seq.
at 603(a) and 604(a). For purposes of
assessing the impacts of the rule on small entities,
‘‘small entities’’ is defined in the RFA to include
small businesses, small not-for-profit organizations,
and small government jurisdictions. Id. at 601(6). A
‘‘small business’’ is determined by application of
Small Business Administration regulations and
reference to the North American Industry
Classification System (NAICS) classifications and
size standards. Id. at 601(3). A ‘‘small organization’’
is any ‘‘not-for-profit enterprise which is
independently owned and operated and is not
dominant in its field.’’ Id. at 601(4). A ‘‘small
governmental jurisdiction’’ is the government of a
city, county, town, township, village, school
district, or special district with a population of less
than 50,000. Id. at 601(5).
15 Id. at 605(b).
14 Id.
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consult with small business
representatives prior to proposing a rule
for which an IRFA is required.16
A FRFA is not required for this final
rule because it will not have a
significant economic impact on a
substantial number of small entities. As
discussed in the Bureau’s Section
1022(b)(2) Analysis above, this final rule
does not introduce costs or benefits to
covered persons because it seeks only to
clarify the method of threshold
adjustment which has already been
established in previous Agency rules.
Therefore this final rule will not have a
significant impact on small entities.
Certification
Accordingly, the Bureau Director, by
signing below, certifies that this final
rule will not have a significant
economic impact on a substantial
number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,17 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 213
Advertising, Consumer leasing,
Consumer protection, Federal Reserve
System, Reporting and recordkeeping
requirements.
12 CFR Part 1013
Advertising, Consumer leasing,
Reporting and recordkeeping
requirements, Truth in lending.
Board of Governors of the Federal
Reserve System
Authority and Issuance
For the reasons set forth in the
preamble, the Board amends Regulation
M, 12 CFR part 213, as set forth below:
PART 213—CONSUMER LEASING
(REGULATION M)
1. The authority citation for part 213
continues to read as follows:
■
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Authority: 15 U.S.C. 1604 and 1667f;
Public Law 111–203, section 1100E, 124 Stat.
1376.
2. In supplement I to part 213, under
Section 213.2—Definitions, under 2(e)
Consumer lease, paragraph 9 is revised,
and paragraphs 10 and 11 are added, to
read as follows:
■
16 Id.
at 609.
17 44 U.S.C. 3506; 5 CFR 1320.
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Supplement I to Part 213—Official Staff
Commentary to Regulation M
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Section 213.2—Definitions
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2(e) Consumer Lease
*
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9. Threshold amount. A consumer
lease is exempt from the requirements of
this part if the total contractual
obligation exceeds the threshold amount
in effect at the time of consummation.
The threshold amount in effect during a
particular time period is the amount
stated in comment 2(e)–11 for that
period. The threshold amount is
adjusted effective January 1 of each year
by any annual percentage increase in
the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W) that was in effect on the
preceding June 1. Comment 2(e)–11 will
be amended to provide the threshold
amount for the upcoming year after the
annual percentage change in the CPI–W
that was in effect on June 1 becomes
available. 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. If a
consumer lease is exempt from the
requirements of this Part because the
total contractual obligation exceeds the
threshold amount in effect at the time of
consummation, the lease remains
exempt regardless of a subsequent
increase in the threshold amount.
10. No increase in the CPI–W. If the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year, the
threshold amount effective the
following January 1 through December
31 will not change from the previous
year. When this occurs, for the years
that follow, the threshold is calculated
based on the annual percentage change
in the CPI–W applied to the dollar
amount that would have resulted, after
rounding, if decreases and any
subsequent increases in the CPI–W had
been taken into account.
i. Net increases. If the resulting
amount calculated, after rounding, is
greater than the current threshold, then
the threshold effective January 1 the
following year will increase
accordingly.
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86259
ii. Net decreases. If the resulting
amount calculated, after rounding, is
equal to or less than the current
threshold, then the threshold effective
January 1 the following year will not
change, but future increases will be
calculated based on the amount that
would have resulted.
11. Threshold. For purposes of
§ 213.2(e)(1), the threshold amount in
effect during a particular period is the
amount stated below for that period.
i. Prior to July 21, 2011, the threshold
amount is $25,000.
ii. From July 21, 2011 through
December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through
December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through
December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through
December 31, 2014, the threshold
amount is $53,500.
vi. From January 1, 2015 through
December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through
December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through
December 31, 2017, 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 M, 12 CFR part 1013, as set
forth below:
PART 1013—CONSUMER LEASING
(REGULATION M)
3. The authority citation for part 1013
continues to read as follows:
■
Authority: 15 U.S.C. 1604 and 1667f;
Public Law 111–203, section 1100E, 124 Stat.
1376.
4. In supplement I to part 1013, under
Section 1013.2—Definitions, under
2(e)—Consumer Lease, paragraph 9 is
revised, and paragraphs 10 and 11 are
added, to read as follows:
■
Supplement I to Part 1013—Official
Interpretations
*
*
*
*
*
Section 1013.2—Definitions
*
*
*
*
*
2(e) Consumer Lease
*
*
*
*
*
9. Threshold amount. A consumer
lease is exempt from the requirements of
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86260
Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
this part if the total contractual
obligation exceeds the threshold amount
in effect at the time of consummation.
The threshold amount in effect during a
particular time period is the amount
stated in comment 2(e)–11 for that
period. The threshold amount is
adjusted effective January 1 of each year
by any annual percentage increase in
the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W) that was in effect on the
preceding June 1. Comment 2(e)–11 will
be amended to provide the threshold
amount for the upcoming year after the
annual percentage change in the CPI–W
that was in effect on June 1 becomes
available. 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. If a
consumer lease is exempt from the
requirements of this part because the
total contractual obligation exceeds the
threshold amount in effect at the time of
consummation, the lease remains
exempt regardless of a subsequent
increase in the threshold amount.
10. No increase in the CPI–W. If the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year, the
threshold amount effective the
following January 1 through December
31 will not change from the previous
year. When this occurs, for the years
that follow, the threshold is calculated
based on the annual percentage change
in the CPI–W applied to the dollar
amount that would have resulted, after
rounding, if decreases and any
subsequent increases in the CPI–W had
been taken into account.
i. Net increases. If the resulting
amount calculated, after rounding, is
greater than the current threshold, then
the threshold effective January 1 the
following year will increase
accordingly.
ii. Net decreases. If the resulting
amount calculated, after rounding, is
equal to or less than the current
threshold, then the threshold effective
January 1 the following year will not
change, but future increases will be
calculated based on the amount that
would have resulted.
11. Threshold. For purposes of
§ 1013.2(e)(1), the threshold amount in
effect during a particular period is the
amount stated below for that period.
VerDate Sep<11>2014
16:13 Nov 29, 2016
Jkt 241001
i. Prior to July 21, 2011, the threshold
amount is $25,000.
ii. From July 21, 2011 through
December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through
December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through
December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through
December 31, 2014, the threshold
amount is $53,500.
vi. From January 1, 2015 through
December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through
December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through
December 31, 2017, the threshold
amount is $54,600.
By order of the Board of Governors of the
Federal Reserve System, November 17, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: November 7, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–28710 Filed 11–29–16; 8:45 am]
BILLING CODE 6210–01–P; 4810–AM–P
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1546]
RIN 7100 AE–57
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
[Docket No. CFPB–2016–0037]
RIN 3170–AA67
Truth in Lending (Regulation Z)
Board of Governors of the
Federal Reserve System (Board); and
Bureau of Consumer Financial
Protection (Bureau).
ACTION: Final rules, official
interpretations and commentary.
AGENCY:
The Board and the Bureau are
finalizing amendments to the official
interpretations and commentary for the
agencies’ regulations that implement the
Truth in Lending Act (TILA). The DoddFrank 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
SUMMARY:
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
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. The final rule
memorializes this as well as the
agencies’ calculation method for
determining the adjustment in years
following a year in which there is no
annual percentage increase in the CPI–
W. Based on the CPI–W in effect as of
June 1, 2016, the exemption threshold
will remain at $54,600 through 2017.
The Dodd-Frank Act also requires
similar adjustments in the Consumer
Leasing Act’s threshold for exempt
consumer leases. Accordingly, the
Board and the Bureau are adopting
similar amendments to the
commentaries 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, 2017.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
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: Jaclyn Maier, Counsel, Office
of Regulations, Consumer Financial
Protection Bureau, 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 and the threshold in the
Consumer Leasing Act (CLA) for exempt
consumer leases, from $25,000 to
$50,000, effective July 21, 2011.2 In
addition, the Dodd-Frank Act requires
that, on and after December 31, 2011,
these thresholds 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
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) (Board) and 12 CFR 1026.3(b)(1)(i)
(Bureau).
2 Public Law 111–203, section 1100E, 124 Stat.
1376 (2010).
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[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Rules and Regulations]
[Pages 86256-86260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28710]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R-1545]
RIN 7100 AE-56
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1013
[Docket No. CFPB-2016-0036]
RIN 3170-AA66
Consumer Leasing (Regulation M)
AGENCY: Board of Governors of the Federal Reserve System (Board); and
Bureau of Consumer Financial Protection (Bureau).
ACTION: Final rules, official interpretations and commentary.
-----------------------------------------------------------------------
SUMMARY: The Board and the Bureau are finalizing amendments to the
official interpretations and commentary for the agencies' regulations
that implement the Consumer Leasing Act (CLA). The Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the
CLA by requiring that the dollar threshold for exempt consumer leases
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.
The final rule memorializes this as well as the agencies' calculation
method for determining the adjustment in years following a year in
which there is no annual percentage increase in the CPI-W. Based on the
CPI-W in effect as of June 1, 2016, the exemption threshold will remain
at $54,600 through 2017. The Dodd-Frank Act also requires similar
adjustments in the Truth in Lending Act's threshold for exempt consumer
credit transactions. Accordingly, the Board and the Bureau are adopting
similar amendments to the commentaries to each of their respective
regulations implementing the Truth in Lending Act elsewhere in this
issue of the Federal Register.
DATES: This final rule is effective January 1, 2017.
FOR FURTHER INFORMATION CONTACT: Board: Vivian W. Wong, Senior 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: Jaclyn Maier, Counsel, Office of Regulations, Consumer
Financial Protection Bureau, 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 Consumer Leasing
Act (CLA) for exempt consumer leases, and 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, on and after December 31, 2011, these
thresholds 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 M (which implements the CLA) consistent with these
provisions of the Dodd-Frank Act, along with a similar final rule
amending Regulation Z (which implements TILA) (collectively, the Board
Final Threshold Rules).\3\
---------------------------------------------------------------------------
\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) (Board) and 12 CFR
1026.3(b)(1)(i) (Bureau).
\2\ Public Law 111-203, section 1100E, 124 Stat. 1376 (2010).
\3\ 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. 4, 2011).
---------------------------------------------------------------------------
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 M
implementing the CLA in an interim final rule, 12 CFR part 1013 (Bureau
Interim Final Rule).\4\ The Bureau Interim Final Rule substantially
duplicated the Board's Regulation M, including the revisions to the
threshold for exempt transactions made by the Board in April 2011. In
April 2016, the Bureau adopted the Bureau Interim Final Rule as final,
subject to intervening final rules published by the Bureau.\5\ Although
the Bureau has the authority to issue rules to implement the CLA for
most entities, the Board retains authority to issue rules under the CLA
for certain motor vehicle dealers covered by section 1029(a) of the
Dodd-Frank Act, and the Board's Regulation M continues to apply to
those entities.\6\
---------------------------------------------------------------------------
\4\ 76 FR 78500 (Dec. 19, 2011).
\5\ 81 FR 25323 (April 28, 2016).
\6\ 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).
---------------------------------------------------------------------------
[[Page 86257]]
Section 213.2(e)(1) of the Board's Regulation M and Sec.
1013.2(e)(1) of the Bureau's Regulation M, 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. They further provide that 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.\7\ 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. Since 2011, the Board and the Bureau
have adjusted the Regulation M exemption threshold annually, in
accordance with these rules.
---------------------------------------------------------------------------
\7\ See comments 2(e)-9 in supplements I of 12 CFR parts 213 and
1013.
---------------------------------------------------------------------------
II. Commentary Revision
On August 4, 2016, the Board and the Bureau published a proposed
rule in the Federal Register to memorialize the calculation method used
by the agencies each year to adjust the exemption threshold. See 81 FR
51400 (Aug. 4, 2016). The proposed commentary stated that 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. The proposed
commentary further set forth the calculation method the agencies would
use in years following a year in which the exemption threshold was not
adjusted because there was no increase in the CPI-W from the previous
year. As the Board and the Bureau discussed in the proposal, the
proposed calculation method would ensure that the values for the
exemption threshold keep pace with the CPI-W as contemplated by section
1100E(b) of the Dodd-Frank Act.
The comment period closed on September 6, 2016. In response to the
proposal, the Board and the Bureau received one comment from a consumer
supporting the proposal. The Board and the Bureau are adopting the
commentary revisions as proposed, with some minor clarifying
amendments. These changes will be effective on January 1, 2017.
Specifically, the Board and the Bureau are adopting comment 2(e)-9
as proposed to move the text regarding the threshold amount that is in
effect during a particular period to a new comment 2(e)-11. The
discussion of how the agencies round the threshold calculation will
remain in comment 2(e)-9.
Furthermore, the Board and the Bureau are adopting new comment
2(e)-10 as proposed to provide that if the CPI-W in effect on June 1
does not increase from the CPI-W in effect on June 1 of the previous
year (i.e., the CPI-W in effect on June 1 is either equal to or less
than the CPI-W in effect on June 1 of the previous year), the threshold
amount effective the following January 1 through December 31 will not
change from the previous year. As the Board and the Bureau discussed in
the proposal, this position is consistent with section 1100E(b) of the
Dodd-Frank Act, which states that the threshold must be adjusted by the
``annual percentage increase'' in the CPI-W (emphasis added), and the
position the agencies have previously taken.\8\ Thus, if the threshold
in effect from January 1, 2019, through December 31, 2019, is $55,500
and the CPI-W in effect on June 1 of 2019 indicates a 1.1 percent
decrease from the CPI-W in effect on June 1, 2018, the threshold in
effect for January 1, 2020, through December 31, 2020, will remain
$55,500.
---------------------------------------------------------------------------
\8\ See, e.g., 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.'').
---------------------------------------------------------------------------
Comment 2(e)-10 also provides that, for the years after a year in
which the threshold did not change because the CPI-W in effect on June
1 decreased from the CPI-W in effect on June 1 of the previous year,
the threshold is calculated by applying the annual percentage change in
the CPI-W to the dollar amount that would have resulted, after
rounding, if the decreases and any subsequent increases in the CPI-W
had been taken into account. Comment 2(e)-10.i further states that, if
the resulting amount, after rounding, is greater than the current
threshold, then the threshold effective January 1 the following year
will increase accordingly.
For example, assume that the threshold in effect from January 1,
2019, through December 31, 2019, is $55,500 and that, due to a 1.1
percent decrease from the CPI-W in effect on June 1, 2018, to the CPI-W
in effect on June 1, 2019, the threshold in effect from January 1,
2020, through December 31, 2020, remains at $55,500. If, however, the
threshold had been adjusted downward to reflect the decrease in the
CPI-W over that time period, the threshold in effect from January 1,
2020, through December 31, 2020, would have been $54,900, after
rounding. Further assume that the CPI-W in effect on June 1, 2020,
increased by 1.6 percent from the CPI-W in effect on June 1, 2019. The
calculation for the threshold that will be in effect from January 1,
2021, through December 31, 2021, is based on the impact of a 1.6
percent increase in the CPI-W on $54,900, rather than $55,500,
resulting in a 2021 threshold of $55,800.
Furthermore, comment 2(e)-10.ii states that, if the resulting
amount calculated, after rounding, is equal to or less than the current
threshold, then the threshold effective January 1 the following year
will not change, but future increases will be calculated based on the
amount that would have resulted, after rounding. To illustrate, assume
in the example above that the CPI-W in effect on June 1, 2020,
increased by only 0.6 percent from the CPI-W in effect on June 1, 2019.
The calculation for the threshold that will be in effect from January
1, 2021, through December 31, 2021, is based on the impact of a 0.6
percent increase in the CPI-W on $54,900. The resulting amount, after
rounding, is $55,200, which is lower than $55,500, the threshold in
effect from January 1, 2020, through December 31, 2020. Therefore, the
threshold in effect from January 1, 2021, through December 31, 2021,
will remain $55,500. However, the calculation for the threshold that
will be in effect from January 1, 2022, through December 31, 2022, will
apply the percentage change in the CPI-W to $55,200, the amount that
would have resulted based on the 0.6 percent change from the CPI-W in
effect on June 1, 2019, after rounding, to the CPI-W in effect on June
1, 2020.
III. 2017 Threshold
Based on the calculation method detailed above, the exemption
threshold amount for 2017 remains at $54,600. This is based on the CPI-
W in effect on June 1, 2016, which was reported on May 17, 2016. 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 CPI-W reported on May 17, 2016 reflects a
0.8 percent increase in the CPI-W from April 2015 to April 2016.
Because the CPI-W decreased from April 2014 to April 2015, the Board
and the Bureau are calculating the threshold based on the amount that
would have resulted had this decrease been taken into
[[Page 86258]]
account, which is $54,200. A 0.8 percent increase in the CPI-W applied
to $54,200 results in $54,600, which is the same threshold amount for
2016. Thus, the exemption threshold amount that will be in effect for
2017 remains at $54,600. The Board and the Bureau are revising the
commentaries to their respective regulations to add new comment 2(e)-
11.viii to state that, from January 1, 2017, through December 31, 2017,
the threshold amount is $54,600. These revisions are effective January
1, 2017.
IV. Regulatory Analysis
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.\9\ The 2017 threshold amount for exempt
consumer leases announced in this rule, $54,600, is technical and
applies the calculation method set forth elsewhere in this final rule,
for which notice and public comment were provided.\10\ For these
reasons, the Board and the Bureau have determined that publishing a
notice of proposed rulemaking and providing opportunity for public
comment for purposes of the 2017 threshold adjustment are unnecessary.
Therefore, the amendments regarding the 2017 threshold amount for
exempt consumer leases are adopted in final form.
---------------------------------------------------------------------------
\9\ 5 U.S.C. 553(b)(B).
\10\ See 81 FR 51400 (Aug. 4, 2016).
---------------------------------------------------------------------------
Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis
In developing the final rule, the Bureau has considered potential
benefits, costs, and impacts.\11\ In addition, the Bureau has
consulted, or offered to consult with, the prudential regulators, the
Securities and Exchange Commission, the Department of Housing and Urban
Development, the Federal Housing Finance Agency, the Federal Trade
Commission, and the Department of the Treasury, including regarding
consistency with any prudential, market, or systemic objectives
administered by such agencies.
---------------------------------------------------------------------------
\11\ Specifically, section 1022(b)(2)(A) calls for the Bureau to
consider the potential benefits and costs of a regulation to
consumers and covered persons, including the potential reduction of
access by consumers to consumer financial products or services; the
impact on depository institutions and credit unions with $10 billion
or less in total assets as described in section 1026 of the Act; and
the impact on consumers in rural areas.
---------------------------------------------------------------------------
The Bureau has chosen to evaluate the benefits, costs and impacts
of the final rule against the current state of the world, which takes
into account the current regulatory regime. The Bureau is not aware of
any significant benefits or costs to consumers or covered persons
associated with the final rule relative to the baseline. The Board
previously stated that if there is no annual percentage increase in the
CPI-W, then the Board (and now the Bureau) will not adjust the
exemption threshold from the prior year.\12\ The final rule
memorializes this in official commentary. The final rule also clarifies
how the threshold is calculated for years after a year in which the
threshold did not change. The Bureau believes that this clarification
memorializes the method that the Bureau would be expected to use: This
method holds the threshold fixed until a notional threshold calculated
using the Bureau's methodology, taking into account both decreases and
increases in the CPI-W, exceeds the actual threshold. The Bureau
requested, but did not receive, comment on this point. Thus, the Bureau
concludes that the final rule will not change the regulatory regime
relative to the baseline and will create no significant benefits,
costs, or impacts.
---------------------------------------------------------------------------
\12\ 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.'').
---------------------------------------------------------------------------
The final rule will have no unique impact on depository
institutions or credit unions with $10 billion or less in assets as
described in section 1026(a) of the Dodd-Frank Act or on rural
consumers. The Bureau does not expect this final rule to affect
consumers' access to credit.
Regulatory Flexibility Act
Board: An initial regulatory flexibility analysis (IRFA) was
included in the proposal in accordance with section 3(a) of the
Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA). In the IRFA,
the Board requested comments on any approaches, other than the proposed
alternatives, that would reduce the burden on small entities. The RFA
requires an agency to prepare a final regulatory flexibility analysis
(FRFA) unless the agency certifies that the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities. In accordance with section 3(a) of the RFA, the
Board has reviewed the final regulation. Based on its analysis, and for
the reasons stated below, the Board believes that the rule will not
have a significant economic impact on a substantial number of small
entities.
1. Statement of the need for, and objectives of, the final rule.
The final rule memorializes the calculation method used by the Board
each year to adjust the exemption threshold in accordance with section
1100E of the Dodd-Frank Act. The final rule also adopts the exemption
threshold that will apply from January 1, 2017, through December 31,
2017, based on the calculation method memorialized in this final rule.
2. Summary of issues raised by comments in response to the initial
regulatory flexibility analysis. The Board did not receive any comments
on the initial regulatory flexibility analysis.
3. Small entities affected by the final rule. Motor vehicle dealers
that are subject to the Board's Regulation M and offer consumer leases
that may be exempt from Regulation M under 12 CFR 213.2(e) would be
affected. While the total number of small entities likely to be
affected by the final rule is unknown, the Board does not believe the
final rule will have a significant economic impact on the entities that
it affects.
4. Recordkeeping, reporting, and compliance requirements. The final
rule would not impose any recordkeeping, reporting, or compliance
requirements.
5. Significant alternatives to the final revisions. The Board has
not identified any significant alternatives that would reduce the
regulatory burden on small entities associated with this final rule.
Bureau: The RFA generally requires an agency to conduct an initial
regulatory flexibility analysis (IRFA) and a final regulatory
flexibility analysis (FRFA) of any rule subject to notice-and-comment
rulemaking requirements.\13\ These analyses must describe the impact of
the proposed and final rules on small entities.\14\ An IRFA or FRFA is
not required if the agency certifies that the rule will not have a
significant economic impact on a substantial number of small
entities.\15\ The Bureau also is subject to certain additional
procedures under the RFA involving the convening of a panel to
[[Page 86259]]
consult with small business representatives prior to proposing a rule
for which an IRFA is required.\16\
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\13\ 5 U.S.C. 601 et seq.
\14\ Id. at 603(a) and 604(a). For purposes of assessing the
impacts of the rule on small entities, ``small entities'' is defined
in the RFA to include small businesses, small not-for-profit
organizations, and small government jurisdictions. Id. at 601(6). A
``small business'' is determined by application of Small Business
Administration regulations and reference to the North American
Industry Classification System (NAICS) classifications and size
standards. Id. at 601(3). A ``small organization'' is any ``not-for-
profit enterprise which is independently owned and operated and is
not dominant in its field.'' Id. at 601(4). A ``small governmental
jurisdiction'' is the government of a city, county, town, township,
village, school district, or special district with a population of
less than 50,000. Id. at 601(5).
\15\ Id. at 605(b).
\16\ Id. at 609.
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A FRFA is not required for this final rule because it will not have
a significant economic impact on a substantial number of small
entities. As discussed in the Bureau's Section 1022(b)(2) Analysis
above, this final rule does not introduce costs or benefits to covered
persons because it seeks only to clarify the method of threshold
adjustment which has already been established in previous Agency rules.
Therefore this final rule will not have a significant impact on small
entities.
Certification
Accordingly, the Bureau Director, by signing below, certifies that
this final rule will not have a significant economic impact on a
substantial number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\17\ 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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\17\ 44 U.S.C. 3506; 5 CFR 1320.
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List of Subjects
12 CFR Part 213
Advertising, Consumer leasing, Consumer protection, Federal Reserve
System, Reporting and recordkeeping requirements.
12 CFR Part 1013
Advertising, Consumer leasing, Reporting and recordkeeping
requirements, Truth in lending.
Board of Governors of the Federal Reserve System
Authority and Issuance
For the reasons set forth in the preamble, the Board amends
Regulation M, 12 CFR part 213, as set forth below:
PART 213--CONSUMER LEASING (REGULATION M)
0
1. The authority citation for part 213 continues to read as follows:
Authority: 15 U.S.C. 1604 and 1667f; Public Law 111-203,
section 1100E, 124 Stat. 1376.
0
2. In supplement I to part 213, under Section 213.2--Definitions, under
2(e) Consumer lease, paragraph 9 is revised, and paragraphs 10 and 11
are added, to read as follows:
Supplement I to Part 213--Official Staff Commentary to Regulation M
* * * * *
Section 213.2--Definitions
* * * * *
2(e) Consumer Lease
* * * * *
9. Threshold amount. A consumer lease is exempt from the
requirements of this part if the total contractual obligation exceeds
the threshold amount in effect at the time of consummation. The
threshold amount in effect during a particular time period is the
amount stated in comment 2(e)-11 for that period. The threshold amount
is adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) that was in effect on the preceding June 1.
Comment 2(e)-11 will be amended to provide the threshold amount for the
upcoming year after the annual percentage change in the CPI-W that was
in effect on June 1 becomes available. 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. If a consumer lease is
exempt from the requirements of this Part because the total contractual
obligation exceeds the threshold amount in effect at the time of
consummation, the lease remains exempt regardless of a subsequent
increase in the threshold amount.
10. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
11. Threshold. For purposes of Sec. 213.2(e)(1), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold
amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, 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 M, 12 CFR part 1013, as set forth below:
PART 1013--CONSUMER LEASING (REGULATION M)
0
3. The authority citation for part 1013 continues to read as follows:
Authority: 15 U.S.C. 1604 and 1667f; Public Law 111-203,
section 1100E, 124 Stat. 1376.
0
4. In supplement I to part 1013, under Section 1013.2--Definitions,
under 2(e)--Consumer Lease, paragraph 9 is revised, and paragraphs 10
and 11 are added, to read as follows:
Supplement I to Part 1013--Official Interpretations
* * * * *
Section 1013.2--Definitions
* * * * *
2(e) Consumer Lease
* * * * *
9. Threshold amount. A consumer lease is exempt from the
requirements of
[[Page 86260]]
this part if the total contractual obligation exceeds the threshold
amount in effect at the time of consummation. The threshold amount in
effect during a particular time period is the amount stated in comment
2(e)-11 for that period. The threshold amount is adjusted effective
January 1 of each year by any annual percentage increase in the
Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-
W) that was in effect on the preceding June 1. Comment 2(e)-11 will be
amended to provide the threshold amount for the upcoming year after the
annual percentage change in the CPI-W that was in effect on June 1
becomes available. 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. If a consumer lease is exempt from the requirements
of this part because the total contractual obligation exceeds the
threshold amount in effect at the time of consummation, the lease
remains exempt regardless of a subsequent increase in the threshold
amount.
10. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
11. Threshold. For purposes of Sec. 1013.2(e)(1), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold
amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, the threshold
amount is $54,600.
By order of the Board of Governors of the Federal Reserve
System, November 17, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: November 7, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-28710 Filed 11-29-16; 8:45 am]
BILLING CODE 6210-01-P; 4810-AM-P
