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F ederal reserve Ba n k DALLAS, TEXAS of Dallas 75222 Circular No. 69-307 December 19, 1969 PROPOSED AMENDMENT TO REGULATION Z To Banks, Other Financial Institutions, Trade Associations, and Others Concerned in the Eleventh Federal Reserve District: There is enclosed a copy of the press release and a proposed amendment toRegulation Z, Truth in Lending, of the Board of Governors ofthe Federal Reserve System that would preserve the right ofconsumers to file civil actions in either Federal or State courts after the Board exempts certain State credit transactions from the Federal Truth in Lending Act. Comments on the proposal should be received by the Board no later than January 22, 1970. Yours very truly, P. E. Coldwell President Enclosure (l) This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) COw FEDERAL i | press RESERVE release For immediate release. December 16, 1969. The Board of Governors of the Federal Reserve System today issued for comment a proposed amendment to its Regulation Z that would preserve the right of consumers to file civil actions in either Federal or State courts after the Board exempts certain State credit transactions from the Federal Truth in Lending Act. Under Section 123 of the Consumer Credit Protection Act, the Board is required to exempt from the disclosure and rescission require ments of Truth in Lending credit transactions subject to State law if it determines tha t the State requirements are substantially similar to the Federal requirements and there is adequate provision for enforcement. If adopted, the proposed amendment would leave criminal and administrative responsibility to State control with respect to exempted transactions. But the proposal would preserve the right of a consumer to seek redress for violations of State law in either Federal or State court and to avail himself of Federal or State rules of court procedure, in cluding those relating to class actions. Under the Act, a customer can collect from a creditor who violates the law civil penalties equal to twice the amount of the finance charge (but in no case would he collect less than $100 or more than $1,000), court costs and reasonable attorney's fees. The Board has not yet granted any State exemptions from the Federal Truth in Lending Act, but notice of receipt of an application from Maine has been published in the Federal Register. Applications from several other states are now being reviewed for completeness by the Board's staff. Comments on the proposed amendment should be submitted to the Board not later than January 22, 1970. -0- A copy of the proposal is attached. FEDERAL RESERVE SYSTEM [12 CFR PART 226 ] [Reg. % TRUTH IN LENDING Exemption of Certain State Regulated Transactions; Proposal to retain access to federal civil remedies. Pursuant to the authority contained in the Consumer Credit Protection Act (15 U.S.C. 1604), the Board of Governors is considering amending Part 226 in the following respects. Section 226.12 would be amended by revising paragraph (b) and by adding a new paragraph (c). As amended, § 226.12 would read as follows: 5 226*12 Exemption of certain State regulated transactions. (a) Exemption for State regulated transactions. In accordance with the provisions of Supplement II to Regulation Z (§ 226.12 - Supple ment), any State may make application to the Board for exemption of any class of transactions within that State from the requirements of Chapter 2 of the Act and the corresponding provisions of this part: (1) Provided, That Under the law of that State, that class of transactions is subject to requirements substantially similar to those imposed under Chap ter 2 of the Act and the corresponding provisions of this part; and (2) There is adequate provision for enforcement. (b) Procedures and criteria. The procedures and criteria under which any State may apply for the determination provided for in paragraph (a) of this section are set forth in Supplement II to Regulation Z ( 5 226.12 Supplement). -2(c) Civil Liability. In order to assure that the concurrent jur diction of Federal and State courts created in section 130(e) of the Act shall continue to have substantive provisions to which such jurisdiction shall apply, and generally to aid in implementing the Act with respect to any class of transactions exempted pursuant to paragraph (a) of this section, the Board pursuant to sections 105 and 123 hereby prescribes that: (1) No such exemption shall be deemed to extend to the civil liability provisions of section 130 and 131; and (2) After an exemption has been granted, the disclosure requirements of the applicable State law shall be the disclosure requirements of this Act, and information required under such State law shall, accordingly, be the "information required under this chapter" (Chapter 2 of the Act) for the purposes of section 130(a). * * * The Board of Governors is required under § 123 of the Consumer Credit Protection Act (15 U.S.C. 1633) to exempt from the disclosure and rescission requirements of the Act (Chapter 2 of Title I of the Act; 15 U.S.C. 1631-41) credit transactions subject to State law if it determines that that law is substantially similar to that of the Act and that there is adequate provision for enforcement. The proposed addition of paragraph (c) to 5 226.12 is designed to preserve the right of a customer to maintain an action under 3 5 130 and 131 of the Act (15 U.S.C. 1640-41) for violations of disclosure provisions after the Board of Governors has exempted the class transactions as being subject to State regulation. If the proposal is adopted, criminal and administrative responsibil ity would be under State control with respect to such exempted transactions. Sections 130 and 131 provide civil remedies for violations of the disclosure requirements of the Act. After an exemption based upon State law has been granted, that law will provide the applicable disclosure require ments , and violations of such requirements would be actionable under 3 § 130 and 131, The customer would, therefore, retain the right granted by subsection (e) of 5 130 to seek redress for violations of such State law in either Federal or State court and to avail himself of the respective State or Federal court procedural rules. Paragraph (b) of j 226.12 would also be revised to indicate that Supplement II ( $226.12-Supplement) has been published, and to eliminate an obsolete reference to the date of the proposed publication. This notice is published pursuant to section 553(b) of Title 5, United States Code, and 5 226.2(a) of the rules of procedure of the Board of Governors of the Federal Reserve System (12 CFR 262.2(a)). To aid in the consideration of this matter by the Board, interested persons are invited to submit relevant data, views or arguments. Any such material should be submitted in writing to the Secretary, Board of Governors of the Federal Reserve System, Washington, D. C. later than January 22, 1970. 20551, to be received not Under the Board's rules regarding availability -4 of information (12 CFR 261), such materials will be available for inspection and copying unless the person submitting the material requests that it be considered confidential. December 15, 1969. Board of Governors of the Federal Reserve System. (SEAL) (signed) Robert P. Forrestal Robert P. Forrestal, Assistant Secretary.
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