Consumer Leasing (Regulation M), 51400-51404 [2016-18059]
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules
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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Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, July 19, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: July 13, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–18058 Filed 8–3–16; 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]
Consumer Leasing (Regulation M)
Board of Governors of the
Federal Reserve System (Board); and
Bureau of Consumer Financial
Protection (Bureau).
ACTION: Proposed rule; official
interpretations.
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AGENCY:
The Board and the Bureau are
proposing to amend 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
SUMMARY:
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Act) amended the CLA 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. The proposal would memorialize
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.
Because the Dodd-Frank Act also
requires similar adjustments in the
Truth in Lending Act’s threshold for
exempt consumer credit transactions,
the Board and the Bureau are proposing
similar amendments to the
commentaries to each of their respective
regulations implementing the Truth in
Lending Act elsewhere in the Federal
Register.
Comments must be received on
or before September 6, 2016.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to the Board and the Bureau.
Commenters are encouraged to use the
title ‘‘Consumer Leasing (Regulation
M)’’ to facilitate the organization and
distribution of comments among the
agencies. Interested parties are invited
to submit written comments to:
Board: You may submit comments,
identified by Docket No. R–1545 or RIN
7100 AE–56, by any of the following
methods:
• Agency Web site: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: regs.comments@
federalreserve.gov. Include the docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
All public comments will be made
available on the Board’s Web site at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons. Accordingly, comments will
not be edited to remove any identifying
or contact information. Public
DATES:
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comments may also be viewed
electronically or in paper in Room MP–
500 of the Board’s Martin Building (20th
and C Streets NW.,) between 9:00 a.m.
and 5:00 p.m. on weekdays.
Bureau: You may submit comments,
identified by Docket No. CFPB–2016–
0036 by any of the following methods:
• Email: FederalRegisterComments@
cfpb.gov. Include Docket No. CFPB–
2016–0036 in the subject line of the
email.
• Electronic: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: Monica Jackson, Office of the
Executive Secretary, Consumer
Financial Protection Bureau, 1700 G
Street NW., Washington, DC 20552.
• Hand Delivery/Courier: Monica
Jackson, Office of the Executive
Secretary, Consumer Financial
Protection Bureau, 1275 First Street NE.,
Washington, DC 20002.
Instructions: All submissions should
include the agency name and docket
number or Regulatory Information
Number (RIN) for this rulemaking.
Because paper mail in the Washington,
DC area and at the Bureau is subject to
delay, commenters are encouraged to
submit comments electronically. In
general, all comments received will be
posted without change to https://
www.regulations.gov. In addition,
comments will be available for public
inspection and copying at 1275 First
Street NE., Washington, DC 20002, on
official business days between the hours
of 10 a.m. and 5 p.m. eastern time. You
can make an appointment to inspect the
documents by telephoning (202) 435–
7275.
All comments, including attachments
and other supporting materials, will
become part of the public record and
subject to public disclosure. Sensitive
personal information, such as account
numbers or Social Security numbers,
should not be included. Comments will
not be edited to remove any identifying
or contact information.
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: Shaakira Gold-Ramirez,
Paralegal Specialist, Jaclyn Maier,
Counsel, Office of Regulations,
Consumer Financial Protection Bureau,
at (202) 435–7700.
SUPPLEMENTARY INFORMATION:
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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 from
$25,000 to $50,000, effective July 21,
2011.1 In addition, the Dodd-Frank Act
requires that, on and after December 31,
2011, 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 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 the
Truth in Lending Act) (collectively, the
Board Final Threshold Rules).2
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).3
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.4 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.5
1 Public Law 111–203, section 1100E, 124 Stat.
1376 (2010).
2 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr.
4, 2011).
3 76 FR 78500 (Dec. 19, 2011).
4 81 FR 25323 (April 28, 2016).
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 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
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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.
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 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,
consistent with these rules. The Board
and the Bureau last published final
rules implementing the exemption
threshold in effect for January 1, 2016,
through December 31, 2016, in
November 2015.7
II. Commentary Revision
The Board and the Bureau are
proposing new commentary to
memorialize the calculation method
used by the agencies each year to adjust
the exemption threshold. Comment
2(e)–9 to the Board’s and Bureau’s
Regulation M currently provides the
threshold amount in effect during a
particular period and details the rules
the agencies use for rounding the
threshold calculation to the nearest
$100 or $1,000 increment, as discussed
above in part I, ‘‘Background.’’
The Board and the Bureau are
proposing to revise comment 2(e)–9 by
moving the text regarding the threshold
amount that is in effect during a
particular period to a new proposed
comment 2(e)–11. The discussion of
how the agencies round the threshold
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).
6 See comments 2(e)–9 in Supplements I of 12
CFR part 213 and 12 CFR part 1013.
7 80 FR 73945 (Nov. 27, 2015).
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calculation would remain in comment
2(e)–9.
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.8 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). The Board and the Bureau are
proposing to memorialize this concept
in proposed comment 2(e)–10, which
would 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, the threshold amount
effective the following January 1
through December 31 will not change
from the previous year. For example, 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.
Proposed comment 2(e)–10 would
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. 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.
Specifically, as set forth under
proposed comment 2(e)–10, 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 if the decreases
and any subsequent increases in the
CPI–W had been taken into account.
Proposed comment 2(e)–10.i further
states that, if the resulting amount 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,
8 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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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. 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 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. 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 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, to the CPI–W in effect on June 1,
2020.
The agencies request comment on all
aspects of the proposed rule.
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
proposed commentary 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 proposal 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.10 The proposal memorializes
this in official commentary. The
proposal also clarifies how the
threshold would be 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, but taking into account
both decreases and increases in the CPI–
W, exceeds the actual threshold. The
Bureau requests comment on this point.
Thus, the Bureau believes that the
proposed rule does not change the
regulatory regime relative to the
baseline and creates no significant
benefits, costs, or impacts.
The proposed 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.
III. Regulatory Analysis
Regulatory Flexibility Act
Board: The Regulatory Flexibility Act
(RFA) requires an agency to publish an
initial regulatory flexibility analysis
with a proposed rule or certify that the
proposed rule will not have a significant
economic impact on a substantial
number of small entities.11 Based on its
analysis, and for the reasons stated
below, the Board believes that the rule
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Bureau’s Dodd-Frank Act Section
1022(b)(2) Analysis
In developing this proposal, the
Bureau has considered potential
benefits, costs, and impacts.9 In
9 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 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.’’).
11 See 5 U.S.C. 601 et seq.
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will not have a significant economic
impact on a substantial number of small
entities. Nevertheless, the Board is
publishing an initial regulatory
flexibility analysis and requests public
comment on all aspects of its analysis.
The Board will, if necessary, conduct a
final regulatory flexibility analysis after
considering the comments received
during the public comment period.
1. Statement of the need for, and
objectives of, the proposed rule. The
proposed rule would memorialize the
calculation method used by the Board
each year to adjust the exemption
threshold in accordance with Section
1100E of the Dodd-Frank Act.
2. Small entities affected by the
proposed 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
proposed rule is unknown, the Board
does not believe the proposed rule will
have a significant economic impact on
the entities that it affects. The Board
invites comment on the effect of the
proposed rule on small entities.
3. Recordkeeping, reporting, and
compliance requirements. The proposed
rule would not impose any
recordkeeping, reporting, or compliance
requirements.
4. Other Federal rules. The Board has
not identified any likely duplication,
overlap and/or potential conflict
between the proposed rule and any
Federal rule.
5. Significant alternatives to the
proposed revisions. The Board solicits
comment on any significant alternatives
that would reduce the regulatory burden
associated on small entities with this
proposed 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.12 These analyses must
‘‘describe the impact of the proposed
rule on small entities’’.13 An IRFA or
12 5
U.S.C. 601 et seq.
at 603(a). For purposes of assessing the
impacts of the proposed 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
13 Id.
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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.14
The Bureau also is subject to certain
additional procedures under the RFA
involving the convening of a panel to
consult with small business
representatives prior to proposing a rule
for which an IRFA is required.15
An IRFA is not required for this
proposal because if adopted it would
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
proposal does not introduce costs or
benefits to covered persons because the
proposal seeks only to clarify the
method of threshold adjustment which
has already been established in previous
Agency rules. Therefore this proposed
rule would not have a significant impact
on small entities.
Certification
Accordingly, the Bureau Director, by
signing below, certifies that this
proposal, if adopted, would not have a
significant economic impact on a
substantial number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,16 the agencies
reviewed this proposed rule. No
collections of information pursuant to
the Paperwork Reduction Act are
contained in the proposed 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
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Text of Proposed Revisions
For the reasons set forth in the
preamble, the Board proposes to amend
Regulation M, 12 CFR part 213, as set
forth below:
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).
14 Id. at 605(b).
15 Id. at 609.
16 44 U.S.C. 3506; 5 CFR 1320.
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PART 213—CONSUMER LEASING
(REGULATION M)
1. The authority citation for part 213
continues to read as follows:
■
Authority: 15 U.S.C. 1604 and 1667f; Pub.
L. 111–203 § 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:
■
Supplement I to Part 213—Official Staff
Interpretations
*
*
§ 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
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51403
in the CPI–W applied to the dollar
amount that would have resulted if
decreases and any subsequent increases
in the CPI–W had been taken into
account.
i. Net increases. If the resulting
amount 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 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.
Bureau of Consumer Financial
Protection
Authority and Issuance
For the reasons set forth in the
preamble, the Bureau proposes to
amend 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; Pub.
L. 111–203 § 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
*
*
§ 1013.2
*
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules
Consumer Lease
rmajette on DSK2TPTVN1PROD with PROPOSALS
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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 if
decreases and any subsequent increases
in the CPI–W had been taken into
account.
i. Net increases. If the resulting
amount 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 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
VerDate Sep<11>2014
14:52 Aug 03, 2016
Jkt 238001
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.
By order of the Board of Governors of the
Federal Reserve System, July 19, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: July 13, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–18059 Filed 8–3–16; 8:45 am]
BILLING CODE 6210–01–4810–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]
Truth in Lending (Regulation Z)
Board of Governors of the
Federal Reserve System (Board); and
Bureau of Consumer Financial
Protection (Bureau).
ACTION: Proposed rule; official
interpretations.
AGENCY:
The Board and the Bureau are
proposing to amend 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
by the annual percentage increase in the
SUMMARY:
PO 00000
Frm 00024
Fmt 4702
Sfmt 4702
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 proposal would
memorialize 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.
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 proposing similar
amendments to the commentaries to
each of their respective regulations
implementing the Consumer Leasing
Act elsewhere in the Federal Register.
DATES: Comments must be received on
or before September 6, 2016.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to the Board and the Bureau.
Commenters are encouraged to use the
title ‘‘Truth in Lending (Regulation Z)’’
to facilitate the organization and
distribution of comments among the
agencies. Interested parties are invited
to submit written comments to:
Board: You may submit comments,
identified by Docket No. R–7100 or RIN
7100 AE–57, by any of the following
methods:
• Agency Web site: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: regs.comments@
federalreserve.gov. Include the docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
All public comments will be made
available on the Board’s Web site at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons. Accordingly, comments will
not be edited to remove any identifying
or contact information. Public
comments may also be viewed
electronically or in paper in Room MP–
500 of the Board’s Martin Building (20th
and C Streets NW.) between 9:00 a.m.
and 5:00 p.m. on weekdays.
E:\FR\FM\04AUP1.SGM
04AUP1
]]>Agencies
[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)]
[Proposed Rules]
[Pages 51400-51404]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18059]
-----------------------------------------------------------------------
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]
Consumer Leasing (Regulation M)
AGENCY: Board of Governors of the Federal Reserve System (Board); and
Bureau of Consumer Financial Protection (Bureau).
ACTION: Proposed rule; official interpretations.
-----------------------------------------------------------------------
SUMMARY: The Board and the Bureau are proposing to amend 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 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. The proposal would memorialize 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.
Because the Dodd-Frank Act also requires similar adjustments in the
Truth in Lending Act's threshold for exempt consumer credit
transactions, the Board and the Bureau are proposing similar amendments
to the commentaries to each of their respective regulations
implementing the Truth in Lending Act elsewhere in the Federal
Register.
DATES: Comments must be received on or before September 6, 2016.
ADDRESSES: Interested parties are encouraged to submit written comments
jointly to the Board and the Bureau. Commenters are encouraged to use
the title ``Consumer Leasing (Regulation M)'' to facilitate the
organization and distribution of comments among the agencies.
Interested parties are invited to submit written comments to:
Board: You may submit comments, identified by Docket No. R-1545 or
RIN 7100 AE-56, by any of the following methods:
Agency Web site: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: regs.comments@federalreserve.gov. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Robert deV. Frierson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue NW.,
Washington, DC 20551.
All public comments will be made available on the Board's Web site
at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets NW.,) between
9:00 a.m. and 5:00 p.m. on weekdays.
Bureau: You may submit comments, identified by Docket No. CFPB-
2016-0036 by any of the following methods:
Email: FederalRegisterComments@cfpb.gov. Include Docket
No. CFPB-2016-0036 in the subject line of the email.
Electronic: https://www.regulations.gov. Follow the
instructions for submitting comments.
Mail: Monica Jackson, Office of the Executive Secretary,
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC
20552.
Hand Delivery/Courier: Monica Jackson, Office of the
Executive Secretary, Consumer Financial Protection Bureau, 1275 First
Street NE., Washington, DC 20002.
Instructions: All submissions should include the agency name and
docket number or Regulatory Information Number (RIN) for this
rulemaking. Because paper mail in the Washington, DC area and at the
Bureau is subject to delay, commenters are encouraged to submit
comments electronically. In general, all comments received will be
posted without change to https://www.regulations.gov. In addition,
comments will be available for public inspection and copying at 1275
First Street NE., Washington, DC 20002, on official business days
between the hours of 10 a.m. and 5 p.m. eastern time. You can make an
appointment to inspect the documents by telephoning (202) 435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or Social
Security numbers, should not be included. Comments will not be edited
to remove any identifying or contact information.
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: Shaakira Gold-Ramirez, Paralegal Specialist, Jaclyn Maier,
Counsel, Office of Regulations, Consumer Financial Protection Bureau,
at (202) 435-7700.
SUPPLEMENTARY INFORMATION:
[[Page 51401]]
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 from $25,000 to $50,000, effective
July 21, 2011.\1\ In addition, the Dodd-Frank Act requires that, on and
after December 31, 2011, 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 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 the Truth in Lending Act)
(collectively, the Board Final Threshold Rules).\2\
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\1\ Public Law 111-203, section 1100E, 124 Stat. 1376 (2010).
\2\ 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).\3\ 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.\4\ 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.\5\
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\3\ 76 FR 78500 (Dec. 19, 2011).
\4\ 81 FR 25323 (April 28, 2016).
\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).
---------------------------------------------------------------------------
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. 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\ 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.
---------------------------------------------------------------------------
\6\ See comments 2(e)-9 in Supplements I of 12 CFR part 213 and
12 CFR part 1013.
---------------------------------------------------------------------------
Since 2011, the Board and the Bureau have adjusted the Regulation M
exemption threshold annually, consistent with these rules. The Board
and the Bureau last published final rules implementing the exemption
threshold in effect for January 1, 2016, through December 31, 2016, in
November 2015.\7\
---------------------------------------------------------------------------
\7\ 80 FR 73945 (Nov. 27, 2015).
---------------------------------------------------------------------------
II. Commentary Revision
The Board and the Bureau are proposing new commentary to
memorialize the calculation method used by the agencies each year to
adjust the exemption threshold. Comment 2(e)-9 to the Board's and
Bureau's Regulation M currently provides the threshold amount in effect
during a particular period and details the rules the agencies use for
rounding the threshold calculation to the nearest $100 or $1,000
increment, as discussed above in part I, ``Background.''
The Board and the Bureau are proposing to revise comment 2(e)-9 by
moving the text regarding the threshold amount that is in effect during
a particular period to a new proposed comment 2(e)-11. The discussion
of how the agencies round the threshold calculation would remain in
comment 2(e)-9.
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.\8\ 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). The Board and the Bureau are
proposing to memorialize this concept in proposed comment 2(e)-10,
which would 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, the
threshold amount effective the following January 1 through December 31
will not change from the previous year. For example, 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\ 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.'').
---------------------------------------------------------------------------
Proposed comment 2(e)-10 would 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. 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.
Specifically, as set forth under proposed comment 2(e)-10, 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 if the decreases and any subsequent increases in the CPI-
W had been taken into account. Proposed comment 2(e)-10.i further
states that, if the resulting amount 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,
[[Page 51402]]
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. 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 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. 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 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, to the CPI-W in effect
on June 1, 2020.
The agencies request comment on all aspects of the proposed rule.
III. Regulatory Analysis
Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis
In developing this proposal, the Bureau has considered potential
benefits, costs, and impacts.\9\ 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.
---------------------------------------------------------------------------
\9\ 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 proposed commentary 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 proposal 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.\10\ The proposal memorializes
this in official commentary. The proposal also clarifies how the
threshold would be 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, but taking into account both decreases
and increases in the CPI-W, exceeds the actual threshold. The Bureau
requests comment on this point. Thus, the Bureau believes that the
proposed rule does not change the regulatory regime relative to the
baseline and creates no significant benefits, costs, or impacts.
---------------------------------------------------------------------------
\10\ 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 proposed 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: The Regulatory Flexibility Act (RFA) requires an agency to
publish an initial regulatory flexibility analysis with a proposed rule
or certify that the proposed rule will not have a significant economic
impact on a substantial number of small entities.\11\ 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. Nevertheless, the Board is publishing an
initial regulatory flexibility analysis and requests public comment on
all aspects of its analysis. The Board will, if necessary, conduct a
final regulatory flexibility analysis after considering the comments
received during the public comment period.
---------------------------------------------------------------------------
\11\ See 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
1. Statement of the need for, and objectives of, the proposed rule.
The proposed rule would memorialize the calculation method used by the
Board each year to adjust the exemption threshold in accordance with
Section 1100E of the Dodd-Frank Act.
2. Small entities affected by the proposed 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 proposed rule is unknown, the Board does not believe
the proposed rule will have a significant economic impact on the
entities that it affects. The Board invites comment on the effect of
the proposed rule on small entities.
3. Recordkeeping, reporting, and compliance requirements. The
proposed rule would not impose any recordkeeping, reporting, or
compliance requirements.
4. Other Federal rules. The Board has not identified any likely
duplication, overlap and/or potential conflict between the proposed
rule and any Federal rule.
5. Significant alternatives to the proposed revisions. The Board
solicits comment on any significant alternatives that would reduce the
regulatory burden associated on small entities with this proposed 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.\12\ These analyses must ``describe the impact
of the proposed rule on small entities''.\13\ An IRFA or
[[Page 51403]]
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.\14\ The Bureau also is subject to certain additional
procedures under the RFA involving the convening of a panel to consult
with small business representatives prior to proposing a rule for which
an IRFA is required.\15\
---------------------------------------------------------------------------
\12\ 5 U.S.C. 601 et seq.
\13\ Id. at 603(a). For purposes of assessing the impacts of the
proposed 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).
\14\ Id. at 605(b).
\15\ Id. at 609.
---------------------------------------------------------------------------
An IRFA is not required for this proposal because if adopted it
would 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 proposal does not introduce costs or benefits to
covered persons because the proposal seeks only to clarify the method
of threshold adjustment which has already been established in previous
Agency rules. Therefore this proposed rule would not have a significant
impact on small entities.
Certification
Accordingly, the Bureau Director, by signing below, certifies that
this proposal, if adopted, would 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,\16\ the
agencies reviewed this proposed rule. No collections of information
pursuant to the Paperwork Reduction Act are contained in the proposed
rule.
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\16\ 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
Text of Proposed Revisions
For the reasons set forth in the preamble, the Board proposes to
amend 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; Pub. L. 111-203 Sec.
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 Interpretations
* * * * *
Sec. 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 if decreases and any subsequent increases in the CPI-W
had been taken into account.
i. Net increases. If the resulting amount 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 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.
Bureau of Consumer Financial Protection
Authority and Issuance
For the reasons set forth in the preamble, the Bureau proposes to
amend 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; Pub. L. 111-203 Sec.
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
* * * * *
Sec. 1013.2 Definitions.
* * * * *
[[Page 51404]]
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 if decreases and any subsequent increases in the CPI-W
had been taken into account.
i. Net increases. If the resulting amount 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 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.
By order of the Board of Governors of the Federal Reserve
System, July 19, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: July 13, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-18059 Filed 8-3-16; 8:45 am]
BILLING CODE 6210-01-4810-AM-P
