Full text of District Notices (Federal Reserve Bank of Dallas) : Regulation B -- Equal Credit Opportunity, Circular No. 83-81

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federal

Reserve Bank o f D allas

DALLAS. TEXAS

75222
Circular No. 83-81
June 29, 1983

REGULATION B
EQUAL CREDIT OPPORTUNITY
(Proposed Revision)
TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has published
for comment a proposal to revise and simplify its Regulation B, Equal Credit
Opportunity. This proposal is a result of the Board’s Regulatory Improvement
Project in which the Board is reviewing and revising its regulations in order to
update them, simplify their language, eliminate obsolete or unneeded language or
provisions, and lighten the burden of compliance.
Interested parties are invited to submit comments concerning the
proposed revision to William W. Wiles, Secretary, Board of Governors of the
Federal Reserve System, 20th S tree t and Constitution Avenue, N.W., Washington,
D.C., 20551.
Comments should refer to Docket Number R-473 and must be
received by August 30, 1983.
Enclosed are copies of the Board's press release and the m aterial as
subm itted for publication in the Federal R egister.
Questions regarding the
m aterial contained in this circular should be directed to the Legal D epartm ent,
Extension 6228.
Additional copies of this circular will be furnished upon request to the
Public Affairs D epartm ent, Extension 6289.
Sincerely yours,

First Vice President
Enclosure

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
Banks and others are encouraged to use the follow ing incom ing WATS numbers in con ta c tin g 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.

FE D E R A LR E S E R V E pressrelease^^^

For immedi ate

The

release

J une 16,

Federal Reser ve Board t o d a y announced t h a t i t i n t e n d s

t o r e vi e w i t s R e g u l a t i o n B, Equal C r e d i t O p p o r t u n i t y .
f o r comment t o a s s i s t
The

i t in th e

Board's review of

Improvement P r o j e c t .
revising all

1983

to

The Board asked

r evi ew by August 30, 1983.
R e g u l a t i o n B i s p a r t of i t s R e g u l a t o r y

Under t h i s p r o j e c t , t h e Board i s r e v i e w i n g and

i t s r e g u l a t i o n s t o u pda t e them, s i m p l i f y t h e i r l a ngu a ge and

e l i m i n a t e o b s o l e t e o r unneeded l a ng ua g e o r p r o v i s i o n s .
Although t h e Board e x p e c t s t o r evi ew R e g u l a t i o n B t h o r o u g h l y ,
i t i s c o n t e mp l a t e d t h a t t h e p r i n c i p a l
be t o u pdat e t h e r e g u l a t i o n .
been amended.

pur pos e o f r e v i s i o n s , i f any, w i l l

The Equal C r e d i t O p p o r t u n i t y Act has not

T h e r e f o r e , t h e Board does not e x p e c t e x t e n s i v e changes

s i m i l a r t o t h e r e v i s i o n s of R e g u l a t i o n s Z ( T r u t h i n Lending) and C
(Home Mortgage D i s c l o s u r e ) , which were t o t a l l y r e v i s e d t o implement
substantial

s t a t u t o r y amendments.

In t h e r e v i s i o n p r o c e s s , t h e Board a l s o wi s hes t o l i g h t e n
t h e burden o f c o mp l i a n c e , w h i l e p r e s e r v i n g t h e consumer p r o t e c t i o n s
mandated by t h e a c t .
The Board i s s o l i c i t i n g comment on t h e i s s u e s i d e n t i f i e d i n t h e
a t t a c h e d n o t i c e as well as on any o t h e r i s s u e s .

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FEDERAL RESERVE SYSTEM
12 CFR P a r t 202
[ R e g u l a t i o n B; Docket No. R-0473]
EgUAL CREDIT OPPORTUNITY
No t i c e o f I n t e n t t o Review R e g u l a t i o n ;
Reque st f o r Comment

AGENCY:

Board o f Gover nor s o f t h e F e d e r a l

ACTION:

Res er v e Syst em.

No t i c e o f i n t e n t .

SUMMARY: The Board i s u n d e r t a k i n g a r e vi e w o f R e g u l a t i o n B, Equal C r e d i t
Op p or tu n it y , p ur s u an t t o th e Board's p o li c y of reviewing a l l of i t s r e g u l a t i o n s
ev e r y f i v e y e a r s .
The Board p l a n s t o r e v i e w R e g u l a t i o n B t o c o n s i d e r w h e t h e r
t h e r e g u l a t i o n can be s i m p l i f i e d o r c l a r i f i e d t o c a r r y o u t more e f f e c t i v e l y t h e
p u r p o s e s of t n e Equal C r e d i t O p p o r t u n i t y Act w i t h o u t d i m i n i s h i n g t h e consumer
p r o t e c t i o n s c o n t a i n e d i n t h e Act and R e g u l a t i o n B.
In o r d e r t o g a t h e r i n f o r m a ­
t i o n needed f o r t h i s r e v i e w and t o e n s u r e t h e p a r t i c i p a t i o n o f i n t e r e s t e d
p a r t i e s a t t h e b e g i n n i n g o f t h e r e v i e w , t h e Board i s s o l i c i t i n g comment on t n e
i s s u e s i d e n t i f i e d below as well as on any o t h e r i s s u e s o f c o n c e r n t o comment er s.
The Board c o n t e m p l a t e s p u b l i s h i n g any s p e c i f i c p r o p o s e d r e v i s i o n s t o t h e r e g u ­
l a t i o n l a t e r in t h e y e a r .
DATE:

Comments must be r e c e i v e d by August 30, 1983.

ADDRESS: Comments may be m a i l e d t o Wi l l i am W W i l e s , S e c r e t a r y , Board o f
.
Governor s o f t h e F e d e r a l Res er ve Syst em, Wa s h i ngt on, D. C. 20551, o r d e l i v e r e d
t o Room B-2223, 20t h and C o n s t i t u t i o n Avenue, N.W., Was h i n g t o n , D. C. between
8: 4 b a. m. and 5 : 1 5 p.m.
Comments may be i n s p e c t e d a t Room B-1122 bet ween 8: 4 5
a. m. and b :15 p.m.
All m a t e r i a l s u b m i t t e d s h o u l d r e f e r t o Docket No. R-0473.
FOR FURTHER INFOKMATIUN CONTACT: Lucy G r i f f i n o r John Wood, S e n i o r A t t o r n e y s ,
D i v i s i o n o f Consumer and Community A f f a i r s , Board o f Gover nor s o f t n e F e de r a l
Res er ve Syst em, Was h i n g t o n , D. C.
20551 ( 2 0 2 - 4 5 2 - 2 4 1 2 ) .
SUPPLEi'ltNTAKY INFORMATION:
In i t s p o l i c y s t a t e m e n t r e g a r d i n g expanded r u l e ­
making p r o c e d u r e s , a d o p t e d i n J a n u a r y 1979 (44 FR 3 9 5 7 ) , t h e Board of Gover nor s
of t h e F e d e r a l Re s e r v e System commi t t ed t o r e v i e w i t s e x i s t i n g r e g u l a t i o n s a t
l e a s t once e v e r y f i v e y e a r s .
Under t h a t p o l i c y , t h e Board i s now u n d e r t a k i n g
a r e v i e w o f R e g u l a t i o n B (12 CFR P a r t 2 0 2 ) , i t s r e g u l a t i o n i mp l e me n t i n g t h e
Equal C r e d i t O p p o r t u n i t y Act (15 U. S. C. 1691 e t s e q . ) .
Al t hough t h e Board e x p e c t s t o r e v i e w t h e r e g u l a t i o n t h o r o u g h l y , i t i s
c o n t e m p l a t e d t h a t t h e p r i n c i p a l p u r p o s e o f r e v i s i o n s , i f a n y , w i l l be t o u p d a t e
the r e g u l a t i o n .
The Equal C r e d i t O p p o r t u n i t y Act has n o t been amended.
There­
f o r e , t h e Board does n o t e x p e c t e x t e n s i v e ch a n g e s s i m i l a r t o t h e r e v i s i o n s of
R e g u l a t i o n s Z ( T r u t h i n Lendi ng) and C (Home Mortgage D i s c l o s u r e ) , which were
t o t a l l y r e v i s e d t o i mplement s u b s t a n t i a l s t a t u t o r y amendments.

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2

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The Board i s s e e k i n g p u b l i c comment g e n e r a l l y on ways in which b ur dens
imposed by t h e r e g u l a t i o n can be e a s e d w i t h o u t r emoving t h e p r o t e c t i o n s a g a i n s t
d i s c r i m i n a t i o n , and on w h e t h e r t h e r e g u l a t i o n ' s g u i d a n c e t o c r e d i t o r s on how
t o comply wi t h t h e a c t can be s i m p l i f i e d .
In a d d i t i o n , t h e Board a l s o s e e k s
comment on w h e t h e r t h e r e g u l a t i o n s h o u l d be m o d i f i e d t o i d e n t i f y and p r o h i b i t
d i s c r i m i n a t o r y p r a c t i c e s more e f f e c t i v e l y .
Board s t a f f has a l r e a d y begun an i n - d e p t n r e v i e w o f t h e r e g u l a t i o n ,
i t s o p e r a t i o n , and r e l e v a n t m a t e r i a l .
Comment i s r e q u e s t e d on any i s s u e s which
coinmenters b e l i e v e a r e wor t hy o f r e v i e w .
In t h e i n i t i a l p h a s e s o f t h i s r e v i e w ,
s t a f f nas i d e n t i f i e d t h e f o l l o w i n g t e c h n i c a l i s s u e s on whicn p u b l i c comment
would be h e l p f u l :
(1)

Sample n o t i c e f o r m. R e g u l a t i o n B c o n t a i n s a sampl e form f o r us e
i n p r o v i d i n y r e a s o n s f o r a d v e r s e a c t i o n and s t a t e s t n a t t n e sampl e
form, i f p ro p er ly completed, s a t i s f i e s t h e adver se a c t i o n n o t i f i ­
c a t i o n requirement ( S ect ion 2 0 2 . 9 ( b ) i 2 ) ).
Information avai laDle
t o t h e Board i n d i c a t e s t h a t t h e r e nas been c o n f u s i o n and r e s u l t i n g
mi s u s e o f t n e sampl e form f o r p r o v i d i n g r e a s o n s f o r a d v e r s e a c t i o n .
Should change s be made t o t h e sampl e n o t i c e ? Should t h e r e g u l a t i o n
c o n t a i n more t h a n one sampl e n o t i c e ? What r e a s o n s f o r a d v e r s e
a c t i o n s h o u l d be added o r d e l e t e d ?

(2)

C r e d i t h i s t o r y i n f o r m a t i o n . P r i o r t o t h e Equal C r e d i t O p p o r t u ­
n i t y Ac t , many women had no c r e d i t h i s t o r y as c r e d i t o r s r o u t i n e l y
r e p o r t e d t h e h i s t o r y o f j o i n t a c c o u n t s in t h e h u s b a n d ' s name o n l y .
As a r e s u l t , when women s o u g h t c r e d i t i n t h e i r own name, t h e y
were o f t e n t u r n e d down b e c a u s e t h e r e was no h i s t o r y r e p o r t e d in
t h e i r name.
Regulation B c u r r e n t l y r e q u i r e s c r e d i t o r s to con­
s i d e r i n f o r m a t i o n o f f e r e d by t h e a p p l i c a n t p e r t a i n i n g t o c r e d i t
h i s t o r y s h a r e d w i t h a s p o u s e , b u t does n o t s p e c i f y w h e t h e r or
n o t c r e d i t o r s may r e q u i r e t h a t t h e i n f o r m a t i o n o f f e r e d Dy t h e
a p p l i c a n t be in a c e r t a i n form o r from a s o u r c e a c c e p t a b l e t o
o r cho s e n by t n e c r e d i t o r ( S e c t i o n 2 0 2 . 6 ( b ) ( 6 ) ) .
Does t h e r e g u ­
l a t i o n s u f f i c i e n t l y p r o t e c t t h e a p p l i c a n t who must v e r i f y or
e s t a b l i s h a c r e d i t h i s t o r y , o r s h o u l d t h e r e g u l a t i o n be r e v i s e d
t o more s p e c i f i c a l l y i d e n t i f y u nd e r wnat c i r c u m s t a n c e s and t o
wnat e x t e n t i n f o r m a t i o n o f f e r e d by t h e a p p l i c a n t s n o u l d oe
c o n s i d e r e d by t h e c r e d i t o r ?

(3)

Adver se a c t i o n n o t i c e s .
The r e g u l a t i o n d e f i n e s c o mp l e t e d a p p l i ­
c a t i o n s ( S e c t i o n 2 0 2 . 2 ( f ) ) and r e t i r e s c r e d i t o r s t o make a
r e a s o n a b l e e f f o r t t o n o t i f y an a p p l i c a n t i f an a p p l i c a t i o n i s
i n c o m p l e t e and a l l o w t h e a p p l i c a n t a r e a s o n a b l e o p p o r t u n i t y t o
complete t h e a p p l i c a t i o n .
The r e g u l a t i o n r e q u i r e s c r e d i t o r s t o
n o t i f y a p p l i c a n t s w i t n i n 30 days of t a k i n g a d v e r s e a c t i o n on an
incomplete a p p l i c a t i o n (Section 2 0 2 . 9 ( a ) ( 1 ) ( i i ) ) .
The r e g u l a t i o n
e x c u s e s t n e c r e d i t o r from p r o v i d i n y t h i s n o t i c e i f t h e a p p l i c a ­
t i o n i s deemed wi t hdr a wn b u t r e s t r i c t s t h i s e x c e p t i o n t o one
s i t u a t i o n - - when t h e p a r t i e s c o n t e m p l a t e t h a t t h e a p p l i c a n t
w i l l i n q u i r e a b o u t t h e a p p l i c a t i o n ' s s t a t u s and t h e a p p l i c a n t

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3

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f a i l s t o do so ( S e c t i o n 2 0 2 . 9 ( d ) ) .
Should t h e r e g u l a t i o n i n c l u d e
o t h e r c i r c u m s t a n c e s i n which an a p p l i c a t i o n can be t r e a t e d as
wi t hdr a wn f o r p u r p o s e s o f d e t e r m i n i n g w h e t h e r an a d v e r s e a c t i o n
n o t i c e must be s e n t t o t h e a p p l i c a n t ?
( 4)

Open-end c r e d i t r e a p p l i c a t i o n s . To p r o t e c t t h e r i g h t s o f a c c o u n t
n o l d e r s upon d i v o r c e o r t h e d e a t h o f a s p o u s e , R e g u l a t i o n 8
g e n e r a l l y p r o h i b i t s c r e d i t o r s from t a k i n g a d v e r s e a c t i o n on an
op e n - e n d a c c o u n t b e c a u s e o f a change i n m a r i t a l s t a t u s .
Credi­
t o r s a r e p e r m i t t e d t o r e q u i r e a r e a p p l i c a t i o n on an open- end
a c c o u n t ori t n e b a s i s of a change o f m a r i t a l s t a t u s where t h e
c r e d i t g r a n t e d was Dased on t h e s p o u s e ' s income and t h e a p p l i ­
c a n t ' s income a l o n e was unaDle t o s u p p o r t t n e c u r r e n t amount of
c r e d i t extended ( Sec tion 2 0 2 . 7 ( c ) ( 2 ) ) .
Are a c c o u n t h o l d e r s a b l e
t o m a i n t a i n t h e i r a c c o u n t s a f t e r a change i n m a r i t a l s t a t u s ?
Does t h e c r e d i t o r ' s r e c o n s i d e r a t i o n u s u a l l y r e s u l t in d e n i a l ?
Should t h e r e g u l a t i o n p r o v i d e p r o c e d u r e s f o r c r e d i t o r s t o f o l l o w
when r e q u i r i n g a r e a p p l i c a t i o n on an o p e n - e n d c r e d i t a c c o u n t
under s e c t i o n 2 0 2 . 7 ( c ) ( 2 ) ?

(5)

A u t h o r i z e d u s e r o f o p e n - e n d c r e d i t . For o p e n- e nd c r e d i t , t h e
r e g u l a t i o n d i s t i n g u i s h e s bet ween a c c o u n t h o l d e r s who a r e c o n ­
t r a c t u a l l y l i a b l e and t h o s e who a r e m e r e l y a u t h o r i z e d u s e r s .
( S e e , f o r e x a m p l e , S e c t i o n s 2 0 2. 7 and 2 0 2 . 1 0 . ) The r e g u l a t i o n
d e f i n e s c o n t r a c t u a l l y l i a b l e ( S e c t i o n 2 0 2 . 2 ( i ) ) , b u t does not
define authorized user.
C o n t r a c t u a l l y l i a b l e account holde rs
a r e p r o t e c t e d a g a i n s t r e a p p l i c a t i o n r e q u i r e m e n t s , change in
t e r m s , o r t e r m i n a t i o n o f t h e a c c o u n t on t h e b a s i s o f a g e , r e t i r e ­
me n t , o r a change in m a r i t a l s t a t u s wher eas a u t h o r i z e d u s e r s
ar e not ( S ect ion 2 0 2 . 7 ( c ) ) .
Should t h e r e g u l a t i o n m a i n t a i n t h e
d i s t i n c t i o n bet ween a c c o u n t h o l d e r s who a r e c o n t r a c t u a l l y l i a b l e
and t h o s e who a r e a u t h o r i z e d u s e r s ? Should t h e r e g u l a t i o n d e f i n e
a u t h o r i z e d u s e r , o r s h o u l d t h e d e f i n i t i o n of c o n t r a c t u a l l y l i a b l e
be r e v i s e d ? Are t h e s e c o n c e p t s p r o p e r l y a p p l i e d i n S e c t i o n
202.7(c)?

Tne Board w i l l r e v i e w t h e i s s u e s and i n f o r m a t i o n o f f e r e d by commenters
r e s p o n d i n g t o t h i s r e q u e s t , and c o n d u c t i t s own r e s e a r c h on l e g a l , e c o no mi c ,
o p e r a t i o n a l and o t h e r i s s u e s and d a t a as t h e y r e l a t e t o R e g u l a t i o n B. Based
on t h i s a n a l y s i s , t h e Board c o n t e m p l a t e s t h a t i t w i l l i d e n t i f y and p u b l i s h f o r
p u b l i c comment any p r o p o s e d cn a n g e s t o R e g u l a t i o n B l a t e r i n t h e y e a r .

Board of Gover nor s o f t h e F e d e r a l

Re s e r v e Syst em, J une 14, 1983.
(signed) James McAfee

James McAfee
Associate Secretary of the Board