The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Federal R of eserve D Bank allas ROBERT D. McTEER, JR. DALLAS, TEXAS P R E S ID E N T A N D C H IE F E X E C U T IV E O F F IC E R 75265-5906 October 31, 1997 Notice 97-101 TO: The Chief Executive Officer of each financial institution and others concerned in the Eleventh Federal Reserve District SUBJECT Revised Regulation M (Consumer Leasing); Consumer Compliance Supervision Program DETAILS Following a review under its Regulatory Planning and Review Program, the Board has published a revised Regulation M, which implements the Consumer Leasing Act on October 7, 1996. The final rule contains a significant number of substantive revisions to the regulation. It essentially establishes a new disclosure scheme that should substantially improve consumer understanding of automobile transactions. The new disclosure scheme requires the preparation of new forms and the reprogramming of computer software. Mandatory compliance with the revised rule was to begin on October 1, 1997; how ever, the Board has delayed compliance until January 1, 1998. The delay facilitates compliance with the regulation and ensures that consumers receive accurate and meaningful disclosures. The above information was originally published in the Federal Register dated Sep tember 30, 1997. The Board has recently published a correction to clarify that the delay of the mandatory compliance date for the revised regulation applies not only to the final rule published in the Federal Register in October 1996, but also to an amendment published on April 1, 1997 (62 FR 15364), and the official staff commentary published on April 4, 1997 (62 FR 16053). In addition, the Board has approved a risk-focused consumer compliance supervision program and extended the consumer examination frequency schedule for state member banks and foreign banking organizations. These actions will enhance the effectiveness of the Federal For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Reserve System’s consumer compliance examination program, reduce the burden of examina tions for supervised institutions, and more effectively deploy Federal Reserve System examina tion resources. Implementation of the new program will be phased in during 1998. ATTACHMENTS A copy of the Board’s notices as they appear on pages 51006-07, Vol. 62, No. 189 of the Federal Register dated September 30, 1997, and page 53733, Vol. 62, No. 200 of the Federal Register dated October 16, 1997, is attached. Also attached is the Board’s press release regard ing the consumer compliance supervision program. MORE INFORMATION For more information, please contact Eugene Coy at (214) 922-6201. For additional copies of this Bank’s notice, contact the Public Affairs Department at (214) 922-5254. Sincerely yours, 51006 Federal Register / Vol. 62, No. 189 / Tuesday, September 30, 1997 / Rules and Regulations transactions. The new disclosure scheme required the preparation of new forms and the reprogramming of com puter software. M andatory com pliance w ith the revised rule was to begin on October 1,1997. The Board is delaying that com pliance date until January 1,1998, to facilitate com pliance w ith the regulation and to ensure that consumers receive accurate and meaningful disclosures. DATES: The m andatory com pliance date for the final rule published at 61 FR 52246 (Oct. 7, 1996) is delayed u ntil January 1, 1998. FOR FURTHER INFORMATION CONTACT: FEDERAL RESERVE SYSTEM 12CFR Part 213 [Regulation M; Docket No. R-0892] Consumer Leading; Delay of Compliance Date Board of Governors of the Federal Reserve System. ACTION: Final rule; delay of com pliance date. AGENCY: Following a review u nder the Board’s Regulatory Planning and Review Program, the Board published a revised Regulation M, w hich im plem ents the Consum er Leasing Act on October 7, 1996. The final rule contains a significant num ber of substantive revisions to the regulation. It essentially establishes a new disclosure scheme that should substantially im prove consum er understanding of automobile SUMMARY: Kyung H. Cho-Miller or Obrea O. Poindexter, Staff Attorneys, Division of Consum er and Com m unity Affairs, Board of Governors of the Federal Reserve System, W ashington, DC 20551, at (202) 452-2412 or 452-3667. For users of Telecom m unications Device for the Deaf (TDD), please contact Dorothea T hom pson at (202) 452-3544. SUPPLEMENTARY INFORMATION: The Consum er Leasing Act (CLA), 15 U.S.C. 1667-1667e, was enacted into law in 1976 as an am endm ent to the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. The Board was given rulew riting authority, and its Regulation M (12 CFR part 213) im plem ents the CLA. The CLA generally governs consum er leases of personal property involving $25,000 or less and a term of more than four m onths. An autom obile lease is the m ost com mon type of consum er lease covered by the CLA. Like the credit provisions of the TILA, the CLA requires lessors to provide uniform cost and other disclosures in consum er lease transactions and in lease advertising. Prior to entering into a lease agreement, lessors m ust give consumers fifteen to tw enty disclosures, including the am ount of initial charges to be paid, an identification of leased property, a paym ent schedule, the responsibilities for m aintaining the leased property, and the liability for term inating a lease early. Following a review u nder the Board’s Regulatory Planning and Review Program, the Board published a revised Regulation M on October 7, 1996 (61 FR 52246), and a new staff com m entary on A pril 4, 1997 (62 FR 16053). The final rule, w hich contains a significant num ber of substantive revisions to the regulation, essentially establishes a new disclosure scheme that should substantially im prove consum er understanding of autom obile lease transactions. The new disclosure scheme required the preparation of new forms and the reprogram ming of com puter software. Federal Register / Vol. 62, No. 189 / Tuesday, September 30, 1997 / Rules and Regulations 51007 The Board has been asked by representatives of the automobile leasing industry—including leasing com panies, autom obile dealerships, and vendor support services—to delay the m andatory com pliance date of the new Regulation M rules beyond October 1, 1997. The request is based on the current state of im plem entation of the new leasing software at the 22,500 newcar dealerships that arrange for autom obile leases provided through approxim ately 9,000 independent lessors. Based on the inform ation that they have shared, less than h alf of the dealerships have the necessary software programs in place that w ould enable them to produce com puter-generated disclosure statements by October 1, 1997. In some cases, they w ould have in place only one of the five or six lessor programs that they typically make available to consumers. The alternative is to complete the leasing forms m anually, w ith resultant delays and a great potential for errors that w ould subsequently have to be corrected. The Board believes that consumers w ill not be well served by proceeding on the October 1 schedule. Accordingly, to better ensure that consum ers receive accurate and m eaningful lease disclosures, the Board has delayed the m andatory com pliance date to January 1, 1998. By order of the Board of Governors o f the Federal Reserve System, September 2 5 ,1 9 9 7 . W illia m W. W iles, Secretary o f the Board. [FR Doc. 97-25921 Filed 9 -2 9 -9 7 ; 8:45 am] BILLING CODE 6210 -01 -M Federal Register / Vol. 62, No. 200 / Thursday, October 16, 1997 / Rules and Regulations FEDERAL RESERVE SYSTEM 12CFR Part 213 [Regulation M; Docket Nos. R-0892, R 0952, and R-0961] Consumer Leasing; Delay of Compliance Date; Correction Board of Governors of the Federal Reserve System. ACTION: Final rule; delay of com pliance date; correction. AGENCY: This docum ent corrects the preamble to the docum ent published in the Federal Register on September 30, 1997 (62 FR 51006), regarding the delay of the m andatory com pliance date for Regulation M, w hich im plem ents the Consum er Leasing Act. This correction clarifies that the delay of the mandatory com pliance date for the revised regulation applies not only to the final rule published in the Federal Register in October 1996, but also to an am endm ent published on A pril 1, 1997 (62 FR 15364), and the official staff com mentary published on A pril 4, 1997 (62 FR 16053). DATES: The date for m andatory com pliance w ith the final rule published on October 7, 1996 (61 FR 52246), an am endm ent published on A pril 1, 1997 (62 FR 15364), and the official staff com m entary published on A pril 4, 1997 (62 FR 16053), is delayed un til January 1, 1998. SUMMARY: FOR FURTHER INFORMATION CONTACT: Kyung H. Cho-Miller or Obrea O. Poindexter, Staff Attorneys, Division of Consum er and Com munity Affairs, Board of Governors of the Federal Reserve System, W ashington, DC 20551, at (202) 452-2412 or 452-3667. For users of Telecom m unications Devices for the Deaf (TDDs), please contact Diane Jenkins at (202) 452-3544. Correction In the Board docum ent for Docket R 0892 published on September 30, 1997, beginning on page 51006 in the Federal Register, the Dates section is corrected to read: Dates: The date for mandatory com pliance w ith the final rule pu blished on October 7, 1996 (61 FR 52246), an am endm ent published on April 1, 1997 (62 FR 15364), and the official staff commentary published on April 4 ,1 9 9 7 (62 FR 16053), is delayed u n til January 1 ,1 9 9 8 . By order o f the Board o f Governors of the Federal Reserve System, acting through the Secretary o f the Board under delegated authority, October 8 ,1 9 9 7 . W illia m W. W iles, Secretary o f the Board. [FR Doc. 9 7 -2 7 2 7 6 Filed 1 0 -1 5 -9 7 ; 8:45 am] BILLING CODE 6210-01- P 53733 FEDERAL RESERVE press release % • • • 4 • • For immediate release September 25, 1997 The Federal Reserve Board has approved a risk-focused consumer compliance supervision program and extended the consumer examination frequency schedule for state member banks and foreign banking organizations. Implementation of the new program will be phased in during 1998. These actions will enhance the effectiveness of the Federal Reserve System's consumer compliance examination program, reduce the burden of examinations for supervised institutions, and more effectively deploy Federal Reserve System examination resources. The new frequency guidelines extend the examination cycle from 18-24 months to 36 months for state member banks having an exemplary compliance history and assets of less than $250 million. An exemplary compliance history is defined as two satisfactory or better ratings for both consumer compliance and the Community Reinvestment Act. Banks with assets greater than $250 million will be examined every 24 months, while banks with performance problems will be examined once every 12 months. (more) 2 The consumer exminations performed under the new progam will be conducted concurrently with examinations for fair lending laws and the CRA, both of which are covered under separate but complimentary programs that reflect the new frequency schedule. An essential component of the new examination approach is the correlation of two risk elements: • regulation risk — which involves an evaluation of the potential consequences to the consumer or the bank of noncompliance with consumer protection laws and regulations; and • product risk — where examiners will identify the potential risks associated with financial products or services relative to a bank's market position, management expertise, and business orientation. The relationships between these two risk elements will then be correlated to determine the level of review necessary to verify a bank's compliance posture. The primary advantage of this examination approach is that it targets examination resources to higher risk areas without compromising the integrity of the examination process. The new program also places a greater emphasis on outreach and monitoring activities. The outreach components of the program will be designed to foster compliance through regular contacts with state member banks. These contacts will be conducted apart from examination and supervisory activities, and will include such items as training seminars and advisory visits. (more) Monitoring efforts will be performed between examinations and will be designed to alert examiners to any potential deterioration in a bank's consumer compliance posture. The conclusions drawn from the monitoring process will be considered when establishing the scope, timing, and staffing of future examinations.
