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F e d e r a l R e s e r v e Ba n k o f D a l la s DALLAS, TEXAS 75222 C ir c u la r No. 75-62 May 8, 1975 PROPOSED NEW REGULATION B IMPLEMENTING THE EQUAL CREDIT OPPORTUNITY ACT TO ALL BANKS, OTHER CREDITORS, AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: T h e Board of G o v e rn o rs of th e Federal R es e rv e System has p ro p o s e d a re g u la tio n to implement the Equal C re d it O p p o rtu n ity Act, w hich fo rb id s d i s c r i m i n a tion by c r e d i t o r s on the b a s is of marital s ta t u s . T h e new Act, w hich makes the Fed eral R e s e rv e r e s p o n s ib le for w riting an implementing r e g u la tio n , goes into effect October 28, 1975. Enforcement of th e Act is the r e s p o n s ib il ity of the Federal T r a d e Commission, th e Federal R e s e rv e B oard, th e Federal Deposit In s u ra n c e C o rp o ra tio n , the C om ptroller of the C u r r e n c y , and nine o th e r F e de ra l a g e n c i e s . T h e Act c o v e r s all who r e g u l a r l y e x te n d c r e d i t to in d iv id u a ls , in c lu din g b a n k s , finance co m p a n ies, d e p a r tm e n t s t o r e s , c r e d it c a r d i s s u e r s , and g o v e rn m e n t a g e n c ie s s u ch a s th e Small B u sin ess A dm in istra tio n . T h e Board also a n n o u n c e d a h e a r in g on the p ro p o se d reg u la tio n to be held before m em bers of th e Board in W ashington, D . C ., on May 28 a n d 29, 1975, b e g in n in g at 10:00 a . m . A ny p e r s o n s d e s i r i n g to g iv e te stim o n y , p r e s e n t e v id e n c e , o r o th e rw is e p a rtic ip a te in th e s e p ro c e e d in g s should file with the S e c r e t a r y , Board of G o v e rn o rs of th e Federal R e s e rv e System , W ashington, D .C . 20551, on or before May 14, 1975. T h e Board will also r e c e iv e w ritten comments on its p ro p o se d r e g u l a tion — to be d e sig n a te d Regulation B — th r o u g h J u n e 30, 1975. In te re sted p e r s o n s a r e invited to submit r e le v a n t d a ta , v ie w s , or a r g u m e n t s c o n c e rn in g th is p roposal to the S e c r e ta r y of th e Board or this R e s e rv e Bank. Attached is a copy of the p ro p o s e d re g u la tio n as it a p p e a r e d in the Fed e ra l R e g iste r on A p ril 25, 1975. Additional copies will be f u r n is h e d upon r e q u e s t to the S e c r e t a r y 's Office of this Bank. Sincerely yours, E rn est T . Baughman President Attachment This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) for any purpose whatsoever and in any this title in lieu of, but not in addition am ount. to, the remedies provided by the laws of (2) This Part im plem ents the Act, the any State or governm ental subdivision purpose of which is to require that finan relating to the prohibition of discrim ina cial institutions and others engaged in tion on the basis of sex or m arital status the extension of credit make that credit with respect to any aspect of a credit equally available to all creditworthy cus transaction. E x tra ct From tomers without regard to sex or m arital ^ 2 0 2 .2 D e fin itio n s and ru les o f c o n status. FEDERAL REGISTER, stru ction . (b) A d m i n i s t r a t i v e e n f o r c e m e n t . (1) For the purposes of this Part, unless VOL. 40, NO. 81, As set forth more fully in section 704 of the Act, adm inistrative enforcem ent of the context indicates otherwise, the fo l F r i d a y , A pril 25, 1975, the Act and this Part w ith respect to lowing definitions and rules of construc certain creditors is assigned to the Comp tion apply: p p . 18183 - 18187 (a) “ A c t ” refers to the Equal Credit troller of the Currency, Board of Gov ernors o f the Federal Reserve System , Opportunity Act (T itle VII of the Con Board of Directors of the Federal D e sum er Credit Protection A c t); (b) “ A c c o u n t ” m eans an extension of posit Insurance Corporation, Federal Home Loan Bank Board acting directly credit; (c) "A d v e r t i s e m e n t ” m eans any com or through the Federal Savings and Loan Insurance Corporation, Administrator of m ercial m essage in any newspaper, m ag the National Credit Union Adm inistra azine, leaflet, flyer or catalog, on radio, tion, Interstate Commerce Commission, television or public address system , in di Civil Aeronautics Board, Secretary of rect m ail literature or other printed m a Agriculture, Farm Credit Adm inistra terial, on any interior or exterior sign or tion, Securities and Exchange Commis display, in any window display, in any FEDERAL RESERVE SYSTEM sion and the Sm all Business Adm inistra point-of-transaction literature or price tag, which is delivered or m ade availa Board of Governors of the Federal tion. Reserve System (2) Except to the extent that adm in ble to an applicant or prospective appli istrative enforcem ent is specifically com cant in any m anner whatsoever; [1 2 CFR Part 2 0 2 ] (d) “ A p p l i c a n t ” m eans any person who m itted to other authorities, Section 704 CONSUMER CREDIT PROTECTION of the Act assigns enforcem ent of the is solicited or applies for an extension of ACT Act and this Part to the Federal Trade credit. The term includes, but is not lim ited to, any person to whom credit is or Commission. Equal Credit Opportunity Act; Notice of Proposed Rulemaking (c) P e n a l t i e s a n d l i a b i l i t i e s (1) S ec has been extended in any form ; (e) " A p p l i c a t i o n ” means a request by tions 706 (a) through (e) of the Act pro The Board of Governors of the Fed an applicant for an extension of credit vide for civil liability for actual and puni eral Reserve System is proposing for which is made in accordance w ith ordi comment regulations im plem enting the tive damages against any creditor who nary procedures used by the creditor in fails to comply with the Act and this Equal Credit Opportunity Act which pro connection with the type of credit re hibits discrim ination on the basis of sex Part. Section 706(b) places a $10,000 quested. The term includes any inform a or m arital status w ith respect to any lim itation on th e am ount of punitive tion requested of the applicant before damages an aggrieved applicant m ay seek aspect of a credit transaction. These reg in an individual capacity and Section taking final action on the request for ulations are designed to provide guid credit; ance for all creditors and borrowers*as 706(c) lim its a creditor’s class action (f) " A r r a n g e f o r e x t e n s i o n o f c r e d i t ” liability for punitive damages to the to which acts and practices are prohib m eans to provide or offer to provide lesser of $100,000 or 1 percent of the cred ited and perm itted w ithin the meaning credit, which is or w ill be extended by of the Act. The regulation applies to all itor’s net worth at the tim e the action another person under a business or other is brought. Section 706(d) provides that creditors w hether they are individuals, relationship pursuant to which the per an aggrieved applicant m ay seek equita son businesses, or governm ental entities. arranging such credit: ble relief in the nature of a perm anent A u t h o r i t y . For the purpose of im ple (1) Receives or will receive a fee, com or temporary injunction, restraining m enting the Equal Credit Opportunity pensation, or other consideration for Act (Pub. L. 93-495) which amends the order, or other action. Section 706(e) fur such service, or Consumer Credit Protection Act (15 ther provides for the awarding of costs (2) Has knowledge of the credit terms U.S.C. § 1601 et seq.), and pursuant to and reasonable attorney’s fees to an ag and participates in the preparation of grieved applicant who brings a success the authority of section 703 of the Equal the application or contract documents Credit Opportunity Act, the Board of ful action under sections 706 (a) through required in connection w ith the exten <d). Governors of the Federal Reserve System sion of credit. (2) Section 706(f) relieves a creditor proposes a new Part 202 (Regulation B ) . from civil liability resulting from any act It does not include honoring a credit Sec. done or om itted in good faith in con card or sim ilar device where no finance 202.1 A u th o rity , Scope, Purpose, E tc. form ity with any rule, regulation or in charge is imposed at the tim e of that 202.2 D efinitions an d R ules o f C o n stru ctio n . terpretation by the Board, notw ithstand transaction; 202.3 G eneral R eq u irem en ts. (g) “ A u t h o r i z e d u s e r ” m eans any per ing th at after such act or om ission has 202.4 P ro h ib ited D iscrim ination. occurred, such rule, regulation or inter son in addition to an obligor who is ex 202.5 Acts P e rm itted . pretation is amended, rescinded or other plicitly perm itted to obtain credit by § 2 0 2 .1 A u thority, sco p e, pu rp o se, etc. wise determined to be invalid for any the term s of an agreement between a creditor and the obligor; (a) A u t h o r i t y , s c o p e a n d p u r p o s e . (1) reason. (h) “ B o a r d ” m eans the Board of Gov This Part comprises the regulations is (3) Section 706(g) provides that, w ith sued by the Board of Governors of the out regard to the am ount in controversy, ernors of the Federal Reserve System; (i) “ C o n d i t i o n o f c r e d i t ” m eans any Federal Reserve System pursuant to the any action under this title m ay be Equal Credit Opportunity Act (Pub. L. brought in any United States district term, requirement or procedure institu court, or in any other court of compe ted by a creditor which affects an ap 93-495; 88 Stat. 1521 et seq.). This Part tent jurisdiction, w ithin one year from p licant’s rights or responsibilities in applies to all persons who regularly ex the date of the occurrence of the viola cluding, but not lim ited to, credit ceil tend, offer to extend, arrange for or offer tion. Under section 705(e) an aggrieved ings, rates, security interests, contractual to arrange for, the extension of credit applicant shall have th e option of pur remedies, penalties, inform ational re as defined under paragraph (j) of § 202.2 suing remedies under the provisions of quirements, investigatory procedures. (t) "P e r s o n ” m eans a natural person, a creditor takes final action on a request collection procedures and number of au corporation, government or govern for credit, the creditor shall retain: thorized users of an account; (1) The application and all other m ental subdivision or agency, trust, (j) “ C r e d i t ” m eans the right granted estate, sole proprietorship, joint venture, written information or facsimiles there by a creditor to an applicant to defer partnership, cooperative or association; of used to evaluate the applicant; paym ent of a debt, or to incur debt and (ii) A copy of any statement submit (u) " S ta n d a rd o f c r e d itw o r th in e s s ” defer its payment, or to purchase prop m eans a criterion used by a creditor to ted by the applicant alleging discrimi erty or services and defer paym ent evaluate an applicant’s or non-applicant nation prohibited by this Part; and therefor; (iii) A copy of any statement fur <k) "Credit card” m eans any card, spouse’s willingness or ability to repay an plate, coupon book or other single credit obligation. Such standards may include, nished to the applicant pursuant to device existing for the purpose of being but are not lim ited to, occupation, in paragraph (a) (4) of this section. (2) Any creditor who has actual notice come, assets, length of tim e in a particu used from tim e to tim e upon presenta tion to obtain m oney, property, labor, or lar job or profession, length of residence that it is under investigation by an en at a particular address or in a particular forcement agency enumerated in § 202.1 services on credit; (b) (1) and (2), or has been served with (1) “ C r e d i t o r ” means, any person whocommunity, outstanding obligations and credit h istory; and notice of an action filed pursuant to regularly extends credit, or arranges for the extension o f credit, or offers to ex (v) “ S t a t e ” m eans any State, the D is § 202.1(c), shall retain all information trict of Columbia, the Commonwealth of required to be retained under paragraph tend or arrange for the extension of such credit. The term includes assignees, Puerto Rico, or any territory or pos (b)(1) of this section in excess of two transferees or subrogees of an original session of the United States. years if such agency or proceedings so creditor who participate in the decision require. § 2 0 2 .3 G eneral R eq u irem en ts. to extend credit in any form, but does (a) A p p l i c a t i o n s . (1) A creditor shall § 202.4 P roh ib ited D iscrim in ation . hot include a person whose only partici (a) G e n e r a l r u l e . It shall be unlawful pation in a credit transaction is to honor act on an application w ithin the period of tim e said creditor generally requires for any creditor to discriminate on the a credit card; (m) "D i s c r i m i n a t e ” m eans to treat to reach a credit decision, but in no basis of sex or marital status with re event shall any creditor fail to act, or spect to any aspect of a credit transac one applicant differently from another; (n) " E x t e n s i o n o f c r e d i t ” m eans the delay a decision on an application, in tion. whole or in part, on the basis of sex or (b) A cts prohibited. Except as other granting of credit in any form and in cludes, but is not lim ited to, credit m arital status. Where a creditor is un wise provided in this Part, prohibited granted in addition to any existing credit able to obtain adequate credit inform a discrimination within the meaning of or credit lim it; credit granted in the tion concerning the applicant, a request this Act includes, but is not limited to, form of a credit card whether or not such by the creditor to the applicant for ad the following acts or practices by a card has been used; the refinancing of ditional inform ation shall not constitute creditor: any credit; the consolidation o f two or delay under this section, provided that (1) To apply different standards of more obligations; the issuance o f a new the creditor reaches a decision promptly creditworthiness or conditions of credit credit card in place of an expiring credit after such inform ation is made available with respect to any aspect of a credit card or in substitution for an existing or determined to be unavailable. transaction, in whole or in part, on the (2) A creditor may inquire as to basis of sex or marital status; credit card; the continuing in force of a previously issued credit card; or the m arital status only where the inquiry (2) Standards of creditworthiness: To continuance, w ithout any special effort m eets the requirements of § 202.5 (b) assign a value to sex or marital status in and ( c ) . No application may include any a credit scoring or point scoring plan; to collect before m aturity, of any exist ing credit or credit lim it; terms identifying the applicant’s title, (3) To request, require or use infor (o) " F a m i l y a c c o u n t ” m eans credit (such as Mr., Mrs., or Ms.) but may pro mation about birth control practices, extended pursuant to an agreem ent vide a blank space for insertion of such a childbearing or childrearing intentions w hich provides th at both one spouse, title by any applicant who so desires. or capability in evaluating creditworthi who is the sole obligor, and the other (3) Every application shall: ness; spouse, who is an authorized user, are <i) Use only terms which are neutral (4) To fail to consider alimony, child entitled to use the account; as to sex unless otherwise required by an support or maintenace payments in the (p) " F a m i l y e x p e n s e s t a t u t e . f ’ m eans a enforcem ent agency enumerated in same manner as income from salary, principle o f S tate law which provides § 202.1(b) (1) and (2) for purposes of wages or other source where the pay that the needs of a fam ily unit or any monitoring com pliance with this Part; ments are received pursuant to a writ member thereof m ay be purchased by (ii) Use only the terms “m arried”, ten agreement or court decree and the either spouse, and that each spouse is "unmarried” and “separated” where any payments are likely to be consistently Jointly and severally liable for any such inquiry as to m arital status is permitted made in the future. Factors which a obligation, regardless of whether one of by § 202.5(b ); creditor may consider in making a deter them knew of or consented to the other’s (iii) State that where an applicant ap mination of the likelihood of future pay purchases or obligations; plies for credit individually and does not ments include, but are not limited to, (q) " L e g a l n a m e ” m eans any first and rely on the creditworthiness of his or the length of time payments have been last nam e perm itted under the law of the her spouse, the only inform ation about received; the regularity of receipt; State in which an applicant resides; it the spouse that should be provided is whether full or partial payments have may include, but is not lim ited to, a birth that perm itted by § 202.5(c) (1 ). been made; and the credit history of the given surname retained by a married (iv) State th at every applicant to payor, where available to the creditor; person and a combined surname adopted whom credit is denied or term inated is (5) To apply different standards of by married persons; entitled to a clear and*meaningful state creditworthiness or conditions of credit, (r) " M a r i t a l s t a t u s ” m eans the state m ent in writing of the reasons for denial in whole or in part, on the basis of the of being unmarried, married, divorced, or term ination if the applicant so re sex or marital status of the sole or prin separated or widowed as defined by ap quests. cipal supporter of a family unit; plicable State law; (6) To discount all or any part of the (4) A creditor shall furnish any appli (s) "N e c e s s a r ie s ” m eans a principle of cant who has applied for credit and to income of an applicant or, where applica State law which provides that purchases whom credit is denied or term inated, a ble, the income of an applicant’s spouse, made by one spouse for th e needs of a clear and m eaningful statem ent in in applying standards of creditworthi fam ily unit or any' member thereof are w riting of the reasons for the denial or ness or conditions of credit, in whole or the legal liability of the other spouse, term ination of credit if the applicant in part, on the basis of sex or marital regardless of whether he or she knew of status; so requests. or consented to the particular purchase (7) Where an applicant applies for (b) P r e s e r v a t i o n o f r e c o r d s . (1) For a or obligation; period ending two years after the date a credit independently of his or her spouse, to fail to consider the credit history, when available, of those family account(s) on which the applicant’s spouse or former spouse is (or was) the sole obligor and the applicant is (or was) the authorized user, if the applicant would be denied credit without consideration of such information; (8) To terminate credit or to impose new conditions of credit on an existing account because of a change in an ap plicant’s marital status without evidence of any unfavorable change in the appli cant’s financial circumstances. A creditor may require that a new application be made after a change in marital status in order to ascertain whether the ap plicant’s financial circumstances have changed; and may terminate credit or change the conditions of credit where warranted by the creditor’s standards of creditworthiness only if the same policy is applied to both sexes upon like changes in marital status; (9) To request, require or use any in formation concerning the spouse or former spouse of any applicant who ap plies for credit individually, and does not rely on the creditworthiness of his or her spouse or former spouse, other than the information allowed by § 202.5(c) (1); (10) Conditions of credit: To fail to establish separate accounts for qualified married applicants who so request; (11) To fail to extend credit to a quali fied applicant in any legal name desig nated by the applicant, except where the creditor has reason to believe that the name is being used for purposes of fraud or misrepresentation. This shall not re quire a creditor to imprint more than one name on any or all of the credit cards issued for an account; (12) To delay a decision, or to fail to act on an application, in whole or in part, on the basis of sex or marital status; (13) To request or require the signa ture of a spouse or other person on a credit instrument or other document required as a condition of credit when the individual applicant meets the credi tor’s standards of creditworthiness with out such a signature; (14) To discourage an applicant from applying for credit, in whole or in part, on the basis of sex or marital status; (15) To publish any advertisement, or engage in any solicitation which, in effect, discourages applicants because of sex or marital status from making an application or from expecting credit priv ileges or benefits^which would otherwise be available. However, this shall not pre clude the publication of affirmative ad vertising directed at a class of people which can be identified by sex or marital status, if such advertising clearly indi cates that applications for credit will be evaluated without regard to sex or marital status; (16) Reporting and maintenance of credit Information: To furnish adverse credit Information concerning an appli cant based on the credit history of the applicant’s spouse or former spouse ex cept where the applicant is (or was) legally liable for, or an authorized user of, the spouse’s or former spouse’s ac counts at the time the adverse credit ex perience occurs (or occurred); (17) Twelve months after the effective date of this regulation, to fail to maintain records of accounts in the names of both spouses when such accounts authorize the use of credit by both spouses; and, when reporting information concerning such accounts to consumer reporting agencies or others, to fail to report all information in the names of both spouses. (c) g a r d in g S c o p e o f p e r m is s ib le in q u ir ie s r e a s p o u s e . (1) Where an appli cant seeks credit and does not rely on the creditworthiness of a spouse, a creditor may request and consider only the fo l lowing inform ation with regard to the spouse: (1) The name and home address of the non-applicant spouse; (ii) W hether the spouses are sepa rated; and (iii) The obligee and amount of debts owed by the non-applicant spouse for § 2 0 2 .5 Acts P erm itted . which the property or income of the ap (a) General provisions. (1) A creditor plicant is or may become liable under may request and consider any informa applicable State laws. (2) Where an applicant seeks credit tion about the financial obligations of an applicant including, but not limited and relies on the creditworthiness of a to, those incurred pursuant to a written non-applicant spouse, a creditor, w heth support agreement or court decree after er applying the doctrine of agency, “nec essaries,” a “fam ily expense statu te” or separation or divorce. (2) A creditor may inquire of an appli any other applicable State law which im cant as to the probable continuity of the poses liability upon either spouse for applicant’s ability to repay within the credit purchases m ade by, or credit ex limitations of § 202.4(b) (3), and may tended to, the other spouse, may request consider the applicant’s response in de and consider only the following inform a tion with regard to m arital statu s: termining creditworthiness. (i) The name and home address of the (3) The extension of credit to a mar ried or separated applicant under a doc non-applicant spouse;* (ii) W hether the spouses are sep trine of “necessaries,” a “family expense statute” or any other applicable State arated; (iii) the employment, business ad law which imposes liability upon either spouse for purchases made by, or credit dress and incom e of the non-applicant extended to, the other spouse, does not spouse; (iv) The obligee and amount of debts constitute discrimination on the basis of owed by the non-applicant spouse for sex or marital status. (4) A creditor may limit the availabili w hich the property or income of the ap ty of “family accounts” to married ap plicant is or may become liable under plicants only where applicable State law applicable State law ; and (v) Any other factors which, under includes a doctrine of “necessaries,” a “family expense statute” or any other the creditor’s ordinary standards of provision which imposes liability upon creditworthiness, would affect a determi* either spouse for credit purchases made nation of the creditworthiness o f the by, or credit extended to, the other non-applicant spouse. (3) A denial of credit because an ap spouse. (b) Inquiry of m arital status. (1) a plicant refuses to answer any inquiries creditor may inquire as to the marital concerning m arital status which are per status of an applicant if the creditor m itted by this Part shall not constitute routinely makes such an inquiry in ex discrim ination. An applicant’s failure to tending credit, and if the inquiry is made answer such inquiries after a good faith for the purpose of ascertaining the effort to do so is not a refusal to answer creditor’s rights and remedies, as set for purposes of th is section. (d) T r e a t m e n t o f e x e m p t i o n s o f c e r forth more fully in paragraph (b) (2) of this section herein, applicable to the par t a i n t y p e s o f i n c o m e f r o m e x e c u t i o n b y ticular extension of credit, and not for c r e d i t o r s . If any portion of a separated, the purpose of discriminating on the divorced or widowed person’s incom e te derived from a source which, under ap basis of marital status. (2) A creditor may inquire as to marplicable federal or State law, is exem pt ital status In order to determine whether from execution, a creditor m ay give con sideration to such an exem ption In de to: (i) Allow the applicant to seek credit term ining the applicant’s creditworthi as an agent of a &on-applicant spouse; ness only if the creditor routinely con (ii) Apply the doctrine of “neces siders such exem ptions in evaluating saries,” a “family expense statute” or creditworthiness, and if: (1) Under applicable federal or State any other applicable State law which imposes liability upon either spouse for law, such Income m ay not be assigned as credit purchases made by, or credit ex security or collateral for an extension of credit; and tended to, the other spouse; (2) The applicant's non-exem pt in (iii) Request or require the joinder of both spouses, as set forth more fully in come or property does not qualify the paragraph (e) of this section, in order to applicant for the requested extension of create a valid lien, pass clear title, waive credit under the creditor’s standards of inchoate rights to property or assign creditworthiness. earnings; or (e) R e q u e s t s f o r s i g n a t u r e s o f b o t h (iv) Apply community property laws, o r d e r t o c re a te a v a lid where relevant to the requested exten s p o u s e s sion of credit, as set forth fully in para p a s s c l e a r t i t l e , w a i v e i n c h o a t e r i g h t s t o p ro p e rty o r a s s ig n e a r n in g s . (1) A graph (f) of this section. in Hen, creditor may request or require the sig (g) S e p a r a t e e x t e n s i o n o f c r e d i t t o natures of both spouses only where both e a c h s p o u s e . (1) A creditor may extend signatures are necessary under the ap separate credit to each spouse if each plicable statutory or decisional law of a applies for credit separately and vol State in order to create a valid lien, pass untarily, any State law to the contrary clear title, waive inchoate rights to prop notwithstanding. erty or assign earnings, if such property (2) Where any state law is pre-empted or earnings are to be the basis or security by this section, each spouse is solely re for the transaction. sponsible for any such separate exten (2) Where the law of a State is unclear sion of credit. Where, in addition, the as to whether the signatures of both signatures of both spouses are neces spouses are necessary to create a valid sary under the Act and paragraph (e) of lien, pass clear title, waive inchoate this section in order to create a valid rights to property or assign earnings, a lien, pass clear title, waive inchoate rights creditor may request or require the sig to property or assign earnings, the credi natures of both spouses if done in good tor may require the signatures of both faith reliance on a legal or similarly reli spouses without violating the Act or this able opinion that there exists a reason Part. able probability that the signatures of (3) When each spouse separately and both spouses are necessary. voluntarily applies for and obtains sepa (3) If, under applicable State law and rate accounts with the same creditor, this Part, the signatures of both spouses those accounts shall not be aggregated are necessary to create a valid lien, pass or otherwise combined for purposes of clear title, waive inchoate rights to prop determining permissible finance charges erty or assign earnings, and both signa or permissible loan ceilings under the tures cannot be obtained, a denial of laws of any State or of the United States. credit does not constitute discrimination In any such case, however, the sum of where, under the creditor’s standards of the finance charges of the two separate creditworthiness, credit cannot be ex accounts shall not exceed the finance tended in the amount sought without the charge which the creditor would have charged if the accounts had been com particular security or collateral. If a lesser amount of credit than bined, unless each spouse shall have sepa originally sought by the applicant would rately and voluntarily requested a sepa be extended by the creditor without the rate account in a separate, dated and signatures of both spouses, the creditor signed personal statement which shall must so notify the applicant and give include a statement to the effect that him or her the option of applying for a the applicant knows that the separate account will require the applicant to pay lesser amount of credit. (f) R e q u e s t f o r s i g n a t u r e s o f b o t h a greater finance charge than if the ac counts were combined. The use of printed sp ou se s i n c o m m u n ity p r o p e r ty S ta te s or otherwise duplicated forms for such w h e r e a n e x te n s io n o f c r e d i t is s o u g h t b y statements is prohibited unless the state o n e s p o u s e a lo n e . (1) Where a spouse seeks unsecuredment declares clearly and conspicuously credit individually or as a sole obligor and with greater prominence than any who may -designate other authorized other portion of the statement, the fact users, a creditor is permitted to request that the applicant will pay a greater or require the signatures of both finance charge than if the accounts were spouses in a community property State combined. (h) R e e v a l u a t i o n o f e x i s t i n g a c c o u n t s . only if: (1) The applicable State law denies the A creditor may require that a new appli applicant power to manage or control the cation be made in order to ascertain particular portion of the community whether an applicant’s financial circum property which would be sufficient to stances have changed; and may termi satisfy the obligation created for the nate credit or change the conditions of credit requested under the creditor’s credit where warranted by the creditor’s standards of creditworthiness upon the standards of creditworthiness; and (ii) The applicant does not have suffi occurrence of any of the following events cient separate property to make him or only if the same policy is applied to her worthy of the amount of credit sought both sexes on like occasions: (1) A change in an applicant’s marital without regard to any community prop status; erty: and (2) Bankruptcy of an applicant’s (iii) The creditor does not choose to apply, or the applicable State law does spouse; (3) A denial of responsibility for an not contain, the doctrine of “necessaries”, a “family expense statute” or any other account by any party liable thereunder. (i) A creditor shall apply ordinary doctrine which imposes liability upon either spouse for purchases made by, or standards of creditworthiness in deter mining whether: credit extended to, the other spouse. (1) A particular applicant; (2) Where a spouse in a community (2) The spouse of an applicant; or property State seeks an extension of (3) Both an applicant and his or her credit for which a security interest in property is required, the provisions of spouse together meet creditor’s require § 227.5(e) apply to determine the situa ments for a particular requested exten tions in which a creditor may request sion of credit. or require the signatures of both spouses E f f e c t i v e d a t e : The effective date of in order to create a valid lien, pass clear these Regulations shall be October 28, title, waive inchoate rights to property 1975. or assign earnings. N o t i c e a n d c o m m e n t s . To aid in con sideration of this proposal, a hearing will be held before available members of the Board on the terrace floor of its building on 20th and C Streets NW., Washington, D.C. on May 28 and 29,1975, beginning at 10 a m. The proceeding will consist of presentations of state ments in oral or written form. Any persons desiring to give testimony, present evidence, or otherwise partici pate in these proceedings should file with the Secretary, Board of Governors of the Federal Reserve System, Wash ington, D.C. 20551, on or before May 14, 1975, a written request containing a statement of the nature of the peti tioner’s interest in the proceedings, the extent of participation desired, a sum mary of the matters concerning which petitioner wishes to give testimony or submit evidence, and the names and identity of witnesses who propose to appear. Interested persons need not participate in the proceedings through oral presen tation in order to have their views considered. Interested persons are invited to sub mit relevant data, views, and arguments concerning this proposal. Any such ma terial should be submitted in writing to the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, to be received no later than June 30,1975. Such material will be made available for public inspection and copy ing upon request, except as provided in § 261.6(a) of the Board’s rules regarding availability of information. All views pre viously expressed in written comments on the pending proposal are under consid eration by the Board and are available for inspection and copying in Room 1020 of the Board’s building. Anyone wishing to submit written comments on the is sues to be considered at the hearing may do so at any time before the close of business on May 14, 1975. This notice is published pursuant to section 553(b) of Title 5 United States Code, and § 262.2(a) of the rules of pro cedure of the Board of Governors of the Federal Reserve System (12 C.F.R. 262.2 (a)). By order of the Board of Governors, April 22, 1975. [s e a l] T h e o d o r e E. A l l i s o n , S e c re ta ry o f th e B o a rd . [PR Doc.75-10846 Filed 4-24-75;8:45 am ]
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