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F ederal R eserve Bank o f D allas
DALLAS. TE X A S

7S222

C irc u la r No. 78-165
November 30, 1978

PROPOSED AMENDMENTS TO REGULATION B — EQUAL CR ED IT O PPORTUNITY

TO A LL BANKS, OTHER CR EDITO RS,
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE D IS T R IC T :
T h e Board of G overnors of the Federal Reserve System recen tly has
proposed to make several changes w hich would broaden the scope of Regulation B.
C u rre n tly the regulation app lies to extenders of c re d it o n ly, but the
Board proposes to amend Regulation B to b rin g w ith in its scope real estate b ro k e rs ,
auto d ea le rs , b u ild e rs , and others who "a rra n g e fo r the extension of cred it" by
re fe r rin g applicants to sources of c r e d it. U n d er the proposed amendment, the
basic antidiscrim ination ru les of Regulation B would a p p ly to this new category of
persons who select the c re d ito rs to w hich applications a re to be subm itted, but no­
tification and rec o rd -k e e p in g requirem ents would not ap p ly to the new category.
T h e second amendment to Regulation B would abolish the exemption from
reco rd -kee p in g and notification requirem ents c u rre n tly granted to cred ito rs in
business c re d it transactions. U nder the regulation as it now stands, the basic
antidiscrim ination ru le applies to business c r e d it. In a d d itio n , the cred ito r who
denies a business loan must inform the business ap p lican t eith er in w ritin g or
o r a lly of the action taken w ith respect to the ap p licatio n . T h e new proposed
amendment would re q u ir e c re d ito rs making d ir e c t business loans of under $100,000
to p ro v id e notice to business applicants in w ritin g of the action taken, a statement
of the ap p lican t's rig h ts u n d er the Equal C re d it O pportunity A c t, the name and a d ­
dress of the c re d ito r's enforcement ag e n cy, and e ith e r a statement of the specific
reasons for denial or a disclosure of the app licant's rig h t to a statement of specific
reasons for d e n ia l. F u rth e r, the proposal would re q u ire a c re d ito r to keep b u s i­
ness c re d it applications u n d er the $100,000 lim it fo r 25 months.
A th ird proposed amendment to Regulation B would elim inate the exem p­
tion of business c re d it from the general p ro h ib itio n in the regulation against asking
the app licant's m arital status.
A final provision would incorporate an official staff in terp retatio n into
the regulation w hich req u ires some notice be g iven to business c re d it applicants of
the action taken on th e ir applications.

Banks and others are encouraged to use the fo llo w in g incom ing W ATS numbers in contacting this Bank:
1-800-492-4403 (intrastate) and 1-800-527-4970 (interstate). F or calls placed locally, please use 651 plus
the extension referred to above.

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

-

2 -

Interested persons a re in vited to submit th e ir comments and opinions
about the proposed amendments to the S e c re ta ry , Board of G overnors of the Federal
Reserve System, Washington, D .C . 20551. Comments should be in w ritin g and
must be received no later than December 26, 1978. A ll comments should include
the docket number R-0185.
T h e te x t of the Board's proposal, noting certain matters on w hich the
Board p a r tic u la rly desires comment, is attached. Questions concerning this or
other consumer matters should be d irected to our Consumer A ffairs Section of the
Bank S u pervision and Regulations Departm ent at E x t. 6169 or E x t. 6171.
S in cerely y o u rs ,
Robert H . Boykin
F irst V ic e President
Attachment

E xtract From
Feder al Register ,
V O L . 43, NO . 208
T h u rs d a y , October 26, 1978
p p . 49987 - 49989

[ 6210 - 01-M ]
FEDERAL RESERVE SYSTEM
[12 CFR P art 202]

[Reg. B; Docket No. R-0185]
EQUAL CREDIT OPPORTUNITY
P ro p o sed Rulem aking
A G EN C Y : B oard o f G overnors o f th e
F ed era l R eserv e S y stem .
A C T IO N : P r o p o s e d r u le s .
SUM M ARY:
The
Board
p rop oses
a m e n d m e n ts to r e g u la tio n B t h a t
w o u ld (1 ) b r in g w it h in t h e s c o p e o f t h e
r e g u la tio n p e r so n s su c h a s r ea l e s ta te
b r o k e rs w h o s e le c t t h e c r e d ito r (s) to
w h ic h a c r e d it a p p lic a tio n w ill b e s u b ­
m itte d ; (2 ) e lim in a t e t h e e x e m p tio n o f
b u s in e s s c r e d it fr o m t h e r e c o r d k e e p in g
a n d n o tif ic a t io n r e q u ir e m e n ts in c e r ­
t a i n t r a n s a c t i o n s u n d e r $ 1 0 0 ,0 0 0 ; a n d
(3 ) e lim in a te t h e e x e m p tio n o f b u si­
n e s s c r e d it fr o m t h e m a r ita l s t a t u s in ­
fo r m a tio n b ar. T h e p ro p o sed a m e n d ­
m e n t r e g a r d in g b u s in e s s c r e d it w o u ld
a lso c la r ify t h e e x is tin g e x e m p tio n a s
it a p p lie s to n o tific a tio n r e q u ir e m e n ts.
D A T E : C o m m e n ts m u s t b e r e c e iv e d o n
o r b e fo r e D e c e m b e r 2 6 ,1 9 7 8 .
A D D R E S S : S ecreta ry , B oard o f G o v ­
ern ors o f th e F ed eral R eserve S y stem ,
W a s h i n g t o n , D .C . 2 0 5 5 1 . A l l c o m m e n t s
sh o u ld r e fe r t o d o c k e t N o . R -0 1 8 5 .
FOR
FURTHER
CONTACT:

IN F O R M A T IO N

D o lo r e s S. S m ith , S e c tio n C h ie f, D i­
v is io n o f C o n su m e r A ffa ir s , B o a r d o f
G overn ors o f th e F ed eral R eserve
S y s t e m , W a s h i n g t o n , D .C . 2 0 5 5 1 ,
2 0 2 -4 5 2 -2 4 1 2 .
S U P P L E M E N T A R Y IN F O R M A T IO N :
1. C r e d i t A r r a n g e r s
T h e B o a r d ' s r e g u l a t i o n B , W h ic h i m ­
p le m e n ts t h e E q u a l C r e d it O p p o r tu n i­
t y A ct, a p p lie s t o a ll p e r s o n s w h o a re
c r e d i t o r s , a s t h a t t e r m Is d e f i n e d b y
t h e r e g u la tio n . T h e e x is tin g § 2 0 2 .2 (1 )
d e f in it io n p r o v id e s t h a t a c r e d it o r is a
p e r s o n w h o in t h e o r d in a r y c o u r s e o f
b u s i n e s s “r e g u l a r l y , p a r t i c i p a t e s i n t h e
d e c is io n o f w h e t h e r or n o t t o e x t e n d
c r e d it.”
T h e sta ff o f th e F ederal T rade C om ­
m issio n h a s u r g e d t h e B o a r d t o a m e n d
t h a t d e fin itio n , to in c lu d e p e r s o n s w h o
in t h e o r d in a r y c o u r s e o f b u s in e s s r e g ­

u la r ly " a rra n g e fo r t h e e x t e n s io n o f
c r e d it.” T h e F T C s t a f f e x p r e s s e s c o n ­
cern th a t real e sta te brok ers m a y n o t
b e c o v ere d b y r e g u la tio n B , sin c e o s ­
te n s ib ly t h e y d o n o t p a r tic ip a te in t h e
c r e d it d e c is io n . T h e F T C s t a f f p o in ts
o u t t h a t , b y t h e i r p a r t i c i p a t i o n in t h e
cr e d it a p p lic a tio n p r o ce ss, r e a l e s ta te
b r o k e r s m a y n e v e r t h e le s s b e in a p o s i­
tio n to in flu e n c e t h e o u tc o m e . T h e y
c ite a r e c e n t H U D r e p o r t 1 in su p p o r t
o f t h e p r o p o s it io n t h a t d is c r im in a to r y
“ s t e e r i n g ” b y r e a l e s t a t e b r o k e r s is t h e
c a u se o f se r v e p r o b le m s fa c e d b y m e m ­
b e r s o f m in o r it y g r o u p s in o b ta in in g
h o u s in g a n d t h a t c r e d it d is c r im in a tio n
m a y e x a c e r b a t e t h is p r o b le m . T h e
F T C s t a f f b e l i e v e s t h e r e is a u t h o r i t y
f o r m a k in g t h e r e g u la t io n a p p lic a b le
to th e se p erso n s b ased o n th e sta tu to ­
ry d e f in it io n o f “ c r e d ito r ,” w h ic h in ­
c lu d e s p e r s o n s w h o r e g u la r ly a r ra n g e
fo r t h e e x t e n s io n o f c r e d it.
T h e p r o p o se d a m e n d m e n t w o u ld
d e f i n e " c r e d i t o r ,” w h i c h i n c l u d e s p e r ­
s o n s w h o r e g u la r ly a r r a n g e fo r t h e e x ­
t e n s io n o f c r e d it.
T h e p r o p o s e d a m e n d m e n t w o u ld
d e f in e " c r e d ito r ” in r e g u la t io n B to in ­
c lu d e p e r s o n s w h o in t h e o r d in a r y
c o u r s e o f b u sin e s s r e g u la r ly a r ra n g e
f o r t h e e x t e n s io n o f c r e d it. “ A r r a n g e
f o r t h e e x t e n s io n o f t h e c r e d it ” w o u ld
m e a n to r e fe r a p p lic a n ts to so u r c e s o f
c r e d it, o r t o s e le c t t h e c r e d ito r s to
w h ic h a p p lic a tio n s a re to b e s u b m it­
ted . U n d e r t h e p r o p o se d la n g u a g e , a r ­
r a n g e r s o f c r e d it w o u ld b e s u b je c t to
t h e b a sic a n tid is c r im in a tio n r u le s o f
r e g u la tio n B . T h e y w o u ld n o t b e s u b ­
j e c t t o its “ m e c h a n ic a l” p r o v isio n s ,
su c h a s t h e n o tific a tio n a n d reco rd ­
k e e p in g r e q u ir e m e n ts a n d t h e r u le s
c o n c e r n in g a p p lic a tio n s .
I f t h is p r o p o sa l w e r e a d o p te d , p e r ­
s o n s a n d o r g a n iz a tio n s s u c h a s b u ild ­
e r s, a u to d e a le r s , a n d lo a n b r o k e r s
w o u ld b e c o m e c r e d ito r s t o t h e e x t e n t
t h a t t h e y e n g a g e in r e fe r r a l a c tiv itie s .
G r o u p s t h a t r e g u la r ly r e fe r p e r s o n s to
fin a n c in g so u rc es, su c h a s n e ig h b o r ­
h o o d se r v ic e c e n te r s o r S t a t e d e p a r t­
m e n ts
of
e c o n o m ic
d e v e lo p m e n t,
w o u ld a lso f a ll w ith in t h e d e fin itio n .
T h e B o a r d in v ite s c o m m e n t s o n t h e
f o llo w in g a s p e c ts o f t h e p r o p o s a l in
p a r t i c u la r :
1.
S h o u ld a rra n g ers w h o d o n o t p a r ­
tic ip a t e in t h e c r e d it d e c is io n b e s u b ­
je c t to r e g u la tio n B?

1“Housing Market Practices Survey,” pre­
pared Jointly by the Department of Housing
and Urban Development and the National
Committee Against Discrimination, April
1978.

2. I f s o , s h o u l d t h e y b e s u b j e c t t o
p r o v isio n s d iff e r e n t fr o m t h o s e p r o ­
p osed ?
3. S h o u l d t h e t e x t o f t h e a m e n d ­
m e n t b e d ra w n m o r e n a r r o w ly , a n d if
so , h ow ?
2.

R e c o rd k e e p in g
R e q u ir e m e n t s in
T r a n s a c t io n s

an d N o tif ic a tio n
B u s in e s s C r e d it

T h e se c o n d a n d t h ir d p r o p o sa ls
r e la te to t h e n o tific a tio n a n d record
r e te n tio n
e x e m p tio n s
fo r
b u sin e s s
c r e d it p r o v id e d b y R e g u la t io n B .
In a c o n su m e r c r e d it tr a n sa c tio n , a
c r e d ito r m u s t g iv e t h e a p p lic a n t n o t ic e
o f t h e a c tio n it ta k e s a n d r e ta in its
re co r d s r e g a r d in g t h e c r e d it a p p lic a ­
t io n fo r 25 m o n th s . W h e r e a d v e r se
a c t io n o c c u r s , c r e d ito r s m u s t p r o v id e
w r i t t e n n o t i c e a b o u t a n a p p l i c a n t ’s
E C O A r ig h ts, to g e th e r w ith a s t a t e ­
m e n t o f t h e r e a so n s o r o f t h e r ig h t to
r e q u e s t t h e r e a s o n s fo r t h e d e n ia l.
E x i s t i n g § 2 0 2 .3 ( e ) p a r t i a l l y e x e m p t s
b u sin e s s c r e d it tr a n s a c tio n s fr o m t h e
reco rd r e te n tio n a n d a d v e r se a c tio n r e ­
q u i r e m e n t s . T h a t is, a n a p p l i c a n t f o r
b u s in e s s c r e d it m a y r e q u e s t w r itte n
n o tic e o f r e a s o n s fo r a d v e r se a c tio n ,
b u t d o e s n o t r e c e iv e it a u to m a tic a lly .
S im ila r ly , t h e b u s in e s s a p p lic a n t c a n
req u est to h a v e th e records o f th e
tr a n sa c tio n r e ta in e d fo r 25 m o n th s. I f
t h e r e is n o s u c h r e q u e s t, t h e c r e d ito r
m a y d isc a r d it s r e c o r d s 90 d a y s a f t e r it
t a k e s a d v e r s e a c tio n .
T h e B o a r d h a s b e e n u r g e d t o m o d ify
t h e s e r e g u la to r y e x e m p tio n s . T h e F T C
s t a f f a n d t h e P r e s i d e n t ’s I n t e r a g e n c y
T ask
F orce
on
W om en
B u s in e ss
O w ners h a v e exp ressed con cern ab ou t
e n f o r c e m e n t o f t h e E C O A in b u sin e s s
c r e d it tr a n sa c tio n s. T h e F T C s t a f f a n d
t h e T a sk F o r c e c o n te n d th a t, w ith o u t
n o t if ic a t io n b y t h e c r e d ito r , w o m e n
a n d m in o r ity g r o u p m e m b e r s w h o o w n
s m a ll b u s in e s s e s m a y n o t r e a liz e t h a t
t h e E C O A a p p lie s to b u s in e s s c r e d it.
W h e n c r e d i t is d e n i e d , t h e y m a y n o t
k n o w , o f th e ir r ig h t to o b ta in t h e re a ­
s o n s f o r t h e d e n ia l. T h u s , .t h e y m a y
n o t p r o te c t th e ir r ig h ts w h e n u n la w fu l
d is c r im in a tio n o c c u r s. I n a d d itio n , t h e
F T C r e l i e s o n c o m p l a i n t s t o g u i d e I ts
en fo r c e m e n t e ffo r ts, an d th e F T C
s t a f f is c o n c e r n e d t h a t a p p lic a n t s
m ig h t n o t c o m p la in t o t h e F T C o r to
o t h e r F e d e r a l e n fo r c e m e n t a g e n c ie s
about
d isc r im in a to r y
trea tm en t.
R e c o r d r e t e n t io n is s im ila r ly c o n s id ­
e r e d im p o r ta n t to e n f o r c e m e n t, in
o rd er t h a t d o c u m e n ta r y e v id e n c e b e

a v a ila b le to b o th p r iv a te litig a n ts a n d
e n f o r c e m e n t a g e n c ie s .
T h e p r o p o s e d a m e n d m e n t s w o u ld
e lim in a te t h e b u sin e s s c r e d it e x e m p ­
tio n s fo r n o tific a tio n a n d r e c o r d -k e e p ­
i n g in t r a n s a c t i o n s i n v o l v i n g d i r e c t
lo a n s w h e r e t h e to ta l a m o u n t o f c r e d it
e x te n d e d by t h e c r e d ito r to t h e a p p li­
c a n t is l e s s t h a n $ 1 0 0 ,0 0 0 . I n t h e c a s e
o f a n a p p lic a tio n , t h e a m o u n t o f t h e
lo a n a p p lie d fo r w o u ld b e a d d e d to
lo a n s p r e v io u s ly g r a n te d in d e t e r m in ­
in g w h e t h e r t h e e x c e p t io n a p p lie s .
A s p rop osed , th e a m e n d m e n ts re­
g a r d in g n o tif ic a t io n a n d r e c o r d -k e e p ­
in g w o u ld a f f e c t id e n tic a l c la s s e s o f
b u sin e s s c r e d it tr a n sa c tio n s. T h e y are,
h o w e v e r , s e p a r a t e p r o p o s a ls a n d w ill
b e d e a lt w ith a c c o r d in g ly w h e n t h e
B o a r d t a k e s f in a l a c tio n .
I f t h e s e a m e n d m e n ts a r e a d o p te d ,
b u s in e s s c r e d ito r s w o u ld b e r e q u ir e d to
c o m p ly r o u tin e ly w ith t h e n o tif ic a t io n
a n d r e c o r d - k e e p i n g p r o v i s i o n s in t r a n s ­
a c tio n s fa llin g w ith in t h e s p e c ifie d
d o l l a r c u t o f f . T h e p r o p o s a l is l i m i t e d
to d ir e c t lo a n s to a v o id im p o s in g
r e c o r d -k e e p in g a n d , n o tif ic a t io n r e ­
q u ir e m e n ts o n su p p lie r s, w h o m a y
e x t e n d tr a d e c r e d it a s a n in c id e n t to
t h e ir p r im a r y b u sin e s s.
T h e B o a r d is p a r t ic u la r ly in t e r e s t e d
in c o m m e n t s o n t h e f o llo w in g p o in ts :
1. W h a t p r o p o r t i o n o f l o a n a p p l i c a ­
tio n s a re m a d e b y b u sin e s s w h o s e o u t ­
s ta n d in g o b lig a tio n s to t h e c r e d ito r a g ­
g r e g a t e t o $ 2 5 ,0 0 0 o r l e s s , a n d w h a t
p r o p o r tio n
of th ese
a re d e c lin e d ?
$ 5 0 ,0 0 0
or
le s s ?
$ 7 5 ,0 0 0
o r le s s ?
$ 1 0 0 ,0 0 0 o r le s s ?
2. W h a t p r o p o r t i o n o f t h e s e b u s i ­
n esses h a v e a n e t w o rth o f m ore th a n

$ 100,000?
3. W h a t w o u l d i t c o s t t o g e n e r a t e a n
a d v e r se a c tio n n o tic e r e g a r d in g a n a p ­
p lic a tio n fo r a b u s in e s s lo a n ?
4. W h e n a b u s i n e s s l o a n a p p l i c a t i o n
is d e n i e d , w h a t r e c o r d s d o l e n d e r s n o r ­
m a lly r e ta in , a n d fo r h o w lo n g ? W h e n
a n a p p lic a tio n is g r a n te d , w h a t r e c o r d s
a r e r e ta in e d ?
5. W h a t w o u l d t h e i n c r e m e n t a l c o s t
b e o f r e ta in in g t h e reco r d s o f b u sin e s s
lo a n
a p p lic a tio n s a s
n ecessa ry
to
c o m p ly w ith t h e p r o p o sed r e c o r d -k e e p ­
in g r e q u ir e m e n ts ?
6. I s t h e $ 1 0 0 ,0 0 0 l i m i t a t i o n in t h e
p r o p o s a l a r e a s o n a b le c r it e r io n in
te r m s o f d e fin in g a c la s s o f b u sin e s se s
t h a t m a y n e e d a d d itio n a l p r o te c tio n
u n d e r R e g u l a t i o n B; i f n o t , w h a t o t h e r
c r ite r io n w o u ld b e b e tte r ?
3. C l a r if ic a t io n o f n o t if ic a t io n
q u i r e m e n t s GENERALLY

re­

A s id e f r o m t h e c h a n g e s d i s c u s s e d
a b o v e, th e p ro p o sed a m e n d m e n t to
§ 2 0 2 .3 (e ) w o u ld a ls o c la r if y t h e n o t if i­
c a tio n r e s p o n s ib ilitie s o f c r e d ito r s to
w h o m t h e e x is tin g b u s in e s s c r e d it e x ­
e m p t io n a p p lie s. O f f ic ia l S t a f f I n t e r ­
p r e ta tio n E C -0 0 0 9 s t a t e s th a t, w h ile
t h e fu ll n o tific a tio n r e q u ir e m e n ts o f

§ 2 0 2 .9 d o n o t a p p l y a u t o m a t i c a l l y , a
c r e d it o r n e v e r t h e le s s m u s t g iv e b u s i­
n e s s a p p lic a n ts s o m e n o tic e , o ra l o r
w r itte n , o f a c tio n ta k e n r e g a r d in g an
a p p lic a tio n o r e x is tin g a c c o u n t, w ith in
a r e a s o n a b le tim e . D e s p it e t h e iss u ­
a n c e o f th is o ffic ia l s t a f f in te r p r e ta ­
t i o n , h o w e v e r , t h e B o a r d ’s s t a f f c o n ­
tin u e s to r e c e iv e q u e s t io n s o n t h is
m a tte r . T h e B o a r d p r o p o se s to a m en d
t h e b u s in e s s c r e d it p r o v isio n s ( s e e p r o ­
p o se d § 2 0 2 .3 (e )(l)(ii)) so a s to in c o r p o ­
r a te t h e s u b s ta n c e o f E C -0 0 0 9 .
4.

M a r tia l s ta tu s in fo rm a tio n
FOR B U SIN E S S CREDIT.

bar

U n d e r R e g u la tio n B , a c r e d ito r w h o
r e c e iv e s a n a p p lic a tio n fo r b u sin e s s
c r e d i t is e x e m p t f r o m t h e r e s t r i c t i o n s
on
a sk in g t h e
a p p lic a n t's m a r tia l
s t a t u s t h a t a p p ly in c e r ta in c o n s u m e r
c r e d it a p p lic a tio n s . T h e I n te r a g e n c y
T ask
F orce
on
W om en
B u s in e ss
O w n ers ex p resses co n cern th a t th is
e x e m p t io n is c o n t r a r y t o t h e c o n g r e s ­
s i o n a l i n t e n t in e n a c t i n g t h e E C O A .
T h e y b e lie v e it d ilu t e s t h e p r o t e c t io n
o f t h e E C O A fo r w o m e n b u sin e s s
ow n ers.
T h e p rop osed
a m e n d m e n t w o u ld
e lim in a te
th e
e x e m p tio n . B u s in e ss
c r e d it w o u ld t h e n b e s u b j e c t to a ll t h e
sa m e r e s tr ic tio n s o n s o lic it a t io n o f in ­
fo r m a tio n a s c o n s u m e r c r e d it.
T h e B o a r d is p a r t ic u la r ly in te r e s t e d
in c o m m e n t s a d d r e ss in g t h e f o llo w in g
is s u e s :
1. T o w h a t e x t e n t w o u l d c h a n g e s in
fo r m s (s u c h a s a p p lic a tio n fo r m s a n d
f i n a n c i a l s t a t e m e n t s ) b e r e q u ir e d ?
2. S h o u l d t h e e x e m p t i o n b e e l i m i n a t ­
ed o n ly a s to c e r ta in c la s s e s o f b u si­
n e s s c r e d it t r a n s a c t io n s , a s is p r o p o s e d
r e g a r d in g n o tific a tio n a n d re c o r d k e e p ­
in g ; a n d i f s o , w o u l d t h e s a m e c r i t e r i a
b e a p p r o p r ia te ?
3. W h a t p e r c e n t a g e
o f b u sin e s s
c r e d it a p p lic a t io n s is f o r c r e d it t o b e
s e c u r e d b y t h e o w n e r ’s a s s e t s ?
T o a id in t h e c o n s id e r a tio n o f t h e s e
p r o p o sa ls b y t h e B o a r d , in te r e s te d p e r ­
so n s a re in v ite d to su b m it r e le v a n t
d a t a , v i e w s , c o m m e n t s ', o r a r g u m e n t s .
A ll s u c h m a te r ia l s h o u ld b e s u b m itt e d
in w r itin g t o t h e S e c r e t a r y , B o a r d o f
G overn ors o f th e F ed eral R eserve
S y s t e m , W a s h i n g t o n , D .C . 2 0 5 5 1 , t o b e
r e c e iv e d n o t la t e r t h a n D e c e m b e r 26,
1978. A ll m a te r ia l s u b m itt e d s h o u ld
r e fe r to d o c k e t N o . R -0 1 8 5 . S u c h In for­
m a tio n w ill b e m a d e a v a ila b le fo r in ­
s p e c tio n a n d c o p y in g u p o n r e q u e st,
e x c e p t a s p r o v i d e d i n § 2 6 1 .6 ( a ) o f t h e
B o a r d ’s r u l e s r e g a r d i n g a v a i l a b i l i t y o f
i n f o r m a t i o n ( 1 2 C F R 2 6 1 .6 ( a ) ) .
T h is n o t ic e is p u b lis h e d p u r s u a n t t o
s e c tio n 5 5 3 (b ) o f T itle 5 U n ite d S t a t e s
C o d e a n d § 2 6 2 .2 ( a ) o f t h e r u l e s o f p r o ­
cedure o f th e B oard o f G overn ors o f
t h e F e d e r a l R e s e r v e S y s t e m (12 C F R
2 6 2 .2 ( a ) ) .
P u r s u a n t t o t h e a u t h o r i t y g r a n t e d in
s e c t i o n 7 0 3 ( a ) o f t h e E C O A ( 1 5 U .S .C .

1 6 9 1 b (a )), t h e
Board
p rop oses
to
a m e n d R e g u la tio n B , 12 C F R p a r t 202,
a s f o l lo w s :
1. S e c t i o n 2 0 2 .2 ( 1 ) w o u l d b e a m e n d ­
e d t o re a d :

§ 202.2 Definitions and rules of construc­
tion.

*

*

*

*

•

( 1 ) Creditor m e a n s a n y p e r s o n w h o
in t h e o r d in a r y c o u r s e o f b u s in e s s r e g ­
u la r ly p a r t ic ip a t e s in t h e d e c is io n o f
w h e t h e r o r n o t to e x t e n d c r e d it. T h e
te r m in c lu d e s a n a ss ig n e e , tr a n s fe r e e ,
o r s u b r o g e e o f a n o r ig in a l c r e d ito r w h o
s o p a r tic ip a te s; b u t a n a ss ig n e e , tr a n s ­
f e r e e , s u b r o g e e , o r o t h e r c r e d i t o r is
n o t a c r e d ito r r e g a r d in g a n y v io la tio n
o f t h e A ct or t h is p a r t c o m m itte d by
t h e o r ig in a l o r a n o th e r c r e d ito r u n le s s
t h e a ss ig n e e , tr a n sfe r e e , su b r o g e e , or
o t h e r c r e d ito r k n ew or h a d r e a so n a b le
n o tic e o f t h e a ct, p o lic y , o r p r a c tic e
t h a t c o n s titu te d t h e v io la tio n b e fo r e
its in v o lv e m e n t w it h t h e c r e d it tr a n s ­
a c tio n . T h e te r m a lso in c lu d e s a n y
p e r s o n w h o in t h e o r d in a r y c o u r s e o f
b u sin e s s r e g u la r ly a r r a n g e s fo r t h e e x ­
t e n s io n o f c r e d it b u t d o e s n o t p a r tic i­
p a te in t h e c r e d it d e c is io n , e x c e p t t h a t
s u c h p e r so n s s h a ll b e e x e m p t fr o m t h e
r e q u i r e m e n t s o f §§ 2 0 2 .5 ( b ) t h r o u g h ( e )
c o n c e r n i n g a p p l i c a t i o n s , 2 0 2 .9 r e l a t i n g
t o n o t i f i c a t i o n s , 2 0 2 .1 0 r e l a t i n g t o f u r ­
n i s h i n g o f c r e d i t i n f o r m a t i o n , 2 0 2 .1 2
r e la tin g
to
record
r e te n tio n ,
and
2 0 2 .1 3 r e l a t i n g t o i n f o r m a t i o n f o r
m o n i t o r i n g p u r p o s e s . Arrange for the
extension of credit m e a n s t o r e f e r a p ­
p lic a n ts o r p r o sp e c tiv e a p p lic a n ts to
o t h e r c r e d ito r s, or to s e le c t o r o f fe r to
s e le c t c r e d ito r s to w h ic h r e q u e s ts fo r
c r e d it m a y b e m a d e . T h e te r m c r e d ito r
d o e s n o t in c lu d e a p e r s o n w h o s e o n ly
p a r t i c i p a t i o n in a c r e d i t t r a n s a c t i o n i n ­
v o lv e s h o n o r in g a c r e d it card.

*

*

*

*

*

2. S e c t i o n 2 0 2 .3 ( e ) w o u l d b e a m e n d ­
e d b y d e le t in g p a r a g r a p h (1 ), b y r e ­
n u m b e r in g e x is tin g p a r a g r a p h s (2 ),
( 3 ), a n d ( 4 ) a s p a r a g r a p h s ( 1 ) , ( 2 ) , a n d
( 3 ), r e s p e c t i v e l y , a n d b y r e v i s i n g t h e
p a r a g r a p h s r e n u m b e r e d ( 1 ) a n d (3 ):

§ 202.3 Special treatment
classes of transactions.

*

*

*

*

for

certain

*

( e ) Business credit. T h e f o l l o w i n g
p r o v isio n s o f t h is p a r t s h a ll n o t a p p ly
to e x t e n s io n s o f c r e d it o f t h e t y p e d e ­
s c r ib e d in s u b s e c t io n (a )(4 ):
( 1 ) S e c t i o n 2 0 2 .9 ( a ) r e l a t i n g t o n o t i f i ­
c a tio n s, e x c e p t th a t:
(i)
T h i s e x e m p t i o n Is n o t a v a i l a b l e
r e g a r d in g a p p lic a tio n s f o r or e x is tin g
e x t e n s io n s o f d ir e c t lo a n s w h e r e t h e
a g g reg a te o f th e a m o u n ts ow ed b y th e
a p p lic a n t to t h e c r e d ito r a n d a n y

a m o u n t a p p lie d
fo r
is le s s t h a n
$ 1 0 0 ,0 0 0 ; a n d
(ii)
I n t h e c a s e o f any. a p p lic a tio n o r
a c c o u n t w h e r e t h i s e x e m p t io n is a v a il­
a b le , t h e c r e d ito r n e v e r t h e le s s s h a ll
n o t if y t h e a p p lic a n t, o r a lly o r in w r it­
in g , w it h in a r e a s o n a b le t im e o f a n y
a c tio n ta k e n r e g a r d in g t h e a p p lic a tio n
o r a c co u n t; a n d if t h e a p p lic a n t,
w ith in 30 d a y s a fte r a n o tific a tio n o f
a d v e r s e a c t io n is g iv e n , r e q u e s t s in
w r itin g t h e r e a s o n s f o r s u c h a c tio n ,
t h e c r e d ito r s h a ll fu r n is h a w r itte n
s ta te m e n t o f sp e c ific r e a so n s fo r t h e
a d v erse a c tio n a n d t h e E C O A n o tic e
w it h in 3 0 d a y s o f s u c h a r e q u e s t, in a c ­
c o r d a n c e w i t h § 2 0 2 .9 ( b ) ;
( 2 ) S e c t i o n 2 0 2 .1 0 r e l a t i n g t o f u r ­
n is h in g o f c r e d it in fo r m a tio n ; a n d
(3 ) S e c tio n
2 0 2 .1 2 ( b ) r e l a t i n g t o
reco r d r e te n tio n , e x c e p t th a t;
( i) T h is e x e m p t io n is n o t a v a ila b le
r e g a r d in g a p p lic a tio n s fo r o r e x is t in g
e x t e n s io n s o f d ir e c t lo a n s w h e r e t h e
a g g reg a te o f th e a m o u n ts ow ed b y th e
a p p lic a n t t o t h e c r e d ito r a n d a n y
am ount
a p p lie d
fo r is le s s t h a n
$ 1 0 0 ,0 0 0 ; a n d
(ii) In t h e c a s e o f a n y a p p lic a tio n or
a c c o u n t w h e r e t h i s e x e m p t io n is a v a il­
a b le , t h e c r e d ito r n e v e r t h e le s s s h a ll
c o m p l y w i t h § 2 0 2 .1 2 ( b ) i f t h e a p p l i ­
c a n t, w ith in 90 d a y s a fte r a d v erse
a c tio n h a s b e e n ta k e n , r e q u e s ts in
w r itin g t h a t t h e reco rd s r e la tin g to
t h e a p p lic a tio n o r a c c o u n t b e r e ta in e d .

B y order o f th e B oard o f G overn ors,
O c t o b e r 1 9 ,1 9 7 8 .
T h e o d o re E. A llis o n ,

Secretary of the Board.
[FR Doc. 78-30266 Filed 10-25-78; 8:45 ami

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