View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FE D E R A L R E S E R V E B A N K OF D A L L A S
Station K, Dallas, Texas 7 5 2 2 2

Circular No. 84-105
November 2, 1984

TO:

All member banks and others concerned in the Eleventh
Federal Reserve District

ATTENTION:

Chief Executive Officer

SUBJECT:

Official Staff Commentary on Regulation Z —
Lending

SUMMARY:

The Board of Governors of the Federal Reserve System
has adopted, in final form, certain changes to the
official
staff commentary on Regulation Z regarding
the disclosure of fees for the use of automated teller
machines.
In addition,
the Board announced that it
has withdrawn the proposed change to the official
staff commentary pertaining to the application of the
securities transaction exemption
issued
by
our
Circular No. 84-23 dated February 9, 1984.

ATTACHMENTS:

Board's notice as published in the Federal Register

MORE INFORMATION:

Legal Department, Extension 6228

ADDITIONAL COPIES:

Public Affairs Department, Extension 6289

Truth

Banks and others are encouraged to use the follow ing incoming W A T S numbers in contacting this Bank: 1-800-442-7140
(intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above.

in

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

40560

Federal Register / Vol. 49, No. 202 / Wednesday, October 17, 1984 / Rules and Regulations

FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Reg. Z; TIL-1]
Truth In Lending; Official Staff
Commentary Revisions
AGENCY: Board of Governors of the
Federal Reserve System.
a c t i o n : Final official staff
interpretation.

The Board is publishing in
final form changes to the official staff
commentary to Regulation Z (Truth in
Lending), 12 CFR Part 226, that address
the disclosure of fees for the use of
automated teller machines. The Board is
not adopting another proposed change
to the official staff commentary that
addressed the scope of the securities
transaction exemption contained in
§ 226.3(d) of Regulation Z. The
commentary applies and interprets the
requirements of Regulation Z with
regard to consumer credit transactions
and is a substitute for individual staff
interpretations of the regulation.
EFFECTIVE DATE: October 16,1984.
SUMMARY:

§ 226.3(d) of Regulation Z to margin
credit transactions in consumer asset
management accounts (49 FR 2211).
These accounts combine transaction
and investment features and are offered
by brokerage and investment firms. The
accounts offer the consumer the
capability to place assets (for example,
cash and securities) in one account for
the purpose of engaging in consumer
transactions, investing excess cash
balances (in a money market mutual
fund, for example), and.buying and
selling securities. Margin credit is
extended by the broker if the uninvested
free credit balances and the redemption
of money market shares are insufficient
to pay for the transaction. After further
analysis of the proposal and of the
comments received, the staff believes
that Regulation Z should not be
interpreted to apply to these margin
credit transactions. The proposal is
therefore not being adopted.
2. Commentary Revisions

SUPPLEMENTARY INFORMATION:

1. General
Effective October 13,1981, an official
staff commentary was published to
interpret Regulation Z (12 CFR Part 226).
The commentary is designed to provide
guidance to creditors in applying the
regulation to specific transactions and is
updated periodically to address
significant questions.
On December 6,1983, the Board
proposed to add a new comment 4(b)(2)2 regarding the disclosure of fees in
interchange or shared systems, and an
additional example to comment 6(b)-l
(48 FR 54642). Final action on these
proposals is being taken at this time.
Although creditors are free to rely on the
provisions as of the effective date, and
are protected if they do so, they need
not follow the revisions until October 1,
1985.
In addition, on January 18,1984, the
Board published a proposed change to
comment 3(d)-l of the official staff
commentary that would have
specifically addressed the application of
the securities transaction exemption in

Section 226.7—Periodic statement.
7(b) Identification of transactions.
New comment 7(b)-2 is added for
guidance on how charges imposed by
terminal-operating institutions other
than the card issuer should be disclosed
on the card issuer's periodic statement.
List of Subjects in 12 CFR Part 226
Advertising, Banks, Banking,
Consumer protection, Credit, Federal
Reserve System, Finance. Penalties,
Truth in lending.

Following is a brief description of the
revisions to the commentary regarding
the disclosure of fees for using an
automated teller machine (ATM) to
obtain a cash advance.

PART 226—[AMENDED]

Subpart A—General

Subpart A—General

FOR FURTHER INFORMATION CONTACT:

Ruth R. Amberg and Gerald P. Hurst,
Senior Attorneys, and Richard S.
Garabedian, Staff Attorney, Division of
Consumer and Community Affairs,
Board of Governors of the Federal
Reserve System, Washington, D.C.
20551, at (202) 452-3667.

Comment 6(b)— is revised by adding
1
an example to clarify that the charges
described in comment 4(a)— that are
5
not finance charges must be disclosed as
“other charges" under § § 226.6(b).
Comment 6(b)— is also revised by
2
adding an example to clarify that the
card issuer has no disclosure
responsibilities on the initial disclosure
statement for certain charges that might
be imposed on the cardholder by other
institutions for the use of their ATMs.

Section 226.4—Finance charge:
4(a) Definition.
Comment 4(a)-5 is added to provide
that certain charges imposed on
cardholders by card issuers for using an
ATM to obtain a cash advance are not
finance charges. The final provision has
been substantially simplified from the
proposal in response to operational and
other concerns raised by the
commenters, and has been relocated
from the commentary on § 226.4(b) to
the commentary on § 226.4(a).
The final comment has been revised
from the proposal to apply to charges
imposed by card issuers on cardholders
for using an ATM to obtain a cash
advance in a proprietary system, as well
as to charges in interchange or shared
systems. A charge imposed on the
cardholder by the card issuer for
obtaining a cash advance at an ATM is
not a finance charge to the extent that
the charge does not exceed the charge
imposed by the card issuer for cash
withdrawals from consumer asset
accounts, such as checking or savings
accounts, at the ATM.
Subpart B—Open-End Credit
Section 226.6—Initial disclosure
statem ent
6(b) Other charges.

(3) Text o f revisions. The revisions to
the commentary (Supplement I to Part
226) read as follows:
*

*

*

*

*

Section 226.4—Finance charge.
4(a) Definition.

*

*

*

*

*

5. Treatment o f fees for use o f automated
teller machines. Any charge imposed on a
cardholder by a card issuer for the use of an
automated teller machine (ATM) to obtain a
cash advance (whether in a proprietary,
shared, interchange, or other system) is not a
finance charge to the extent that it does not
exceed the charge imposed by the card issuer
on its cardholders for using the ATM to
withdraw cash from a consumer asset
account, such as a checking or savings
account. (See the commentary to § 226.6(b).)

*

*

*

*

*

Subpart B—Open-End Credit

*

*

*

*

*

Section 226.6—Initial disclosure statement.

*

*

*

*

*

6(h) Other charges.
1. General; examples o f other charges.
Under section 226.6(b), significant charges
related to the plan (that are not finance
charges) must also be disclosed. For example:
• Automated teller machine (ATM) charges
described in comment 4(a)-5 that are not
finance charges.
2. Exclusions. The following are examples
of charges that are not "other charges": * * *
* Charges imposed on a cardholder by an
institution other than the card issuer for the
use of the other institution’s ATM in a

Federal Register / Vol. 49, No. 202 / Wednesday, October 17, 1984 / Rules and Regulations
shared or interchange system. (See also
comment 7(b)—
2.)
*

*

*

*

*

Section 226.7—Periodic statement.
*

*

*

*

*

7(b) Identification o f transactions.
*

*

*

*

*

2. Autom ated teller machine (ATM)
charges im posed by other institutions in
shared or interchange system s. A charge
imposed on the cardholder by an institution
other than the card issuer for the use of the
other institution's ATM in a shared or
interchange system and included by the
terminal-operating institution in the amount
of the transaction need not be separately
disclosed on the periodic statement.
*

*

*

*

*

Board of Governors of the Federal Reserve
System, October 11,1984.
William W. Wiles,
Secretary o f the Board.
(PR Doc. 84-27348 Filed 10-16-84; 8:45 am)
BILLING CODE 6210-01-**

40581


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102