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FEDERAL RESERVE
OF NEW
BANK
YORK
r Circular No. 3 1 5 7 "1
L November 18, 1946 J
CONSUMER CREDIT
REGULATION W OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
To Registrants under Regulation IV, and
Others Concerned, in the Second Federal Reserve District:
F o r your information we quote below the text o f a press statement issued by the Board of
Governors o f the Federal Reserve System and released fo r publication on November 16, 1946:
Effective December 1, 1946, the Board of Governors has today revised Regulation W by confining
it to instalment credit and centering it on purchases of major durable goods. If regulation in the field
of consumer credit is to be continued on a peacetime basis, the Board believes that the regulation should
in general be in the form and scope of this revision in order to be an effective influence towards
stability in this sector of the economy.
This regulation now rests on an Executive Order of August 9, 1941, which is revocable by the
President or by action of Congress. The issue as to whether regulation should or should not be con
tinued in any form is a subject of sharp controversy among various groups affected by it. The Board
feels that the issue should be decided by the Congress and that the present revision is an appropriate
means of bringing before the Congress the question of whether the Executive Order should be vacated
or whether authority for such regulation should be continued by specific legislation.
In its Annual Report to Congress last June, the Board recommended that Congress give consid
eration to the question of whether regulation of consumer credit should be continued on a peacetime
basis as a subordinate but contributory factor in the maintenance of economic stability. As the Report
stated, “ Over the past 30 years consumer instalment financing has come to occupy an important and
strategic place in the national economy. Such financing is essential to the mass distribution and con
sequently to the mass production of consumers’ durable goods. From time to time, however, the
expansion and subsequent contraction of consumer credit have gone so far as to accentuate the
upswings and downswings of the business cycle. There is no way of preventing such excessive expan
sion and contraction except governmental regulation of the terms on which consumer credit shall be
made available, such as the down payment required on instalment sales or financing and the length
of time permissable for instalment contracts.”
The regulation is now revised in the light of the foregoing considerations. Under this revision,
the regulation is focused on instalment credit, both instalment sales and instalment loans, including
12 major categories of durable consumers’ goods, which constitute the great dollar bulk of credit subject
to the widest expansion and contraction. Charge accounts and single-payment loans, in which fluctua
tions are comparatively small, are eliminated from the scope of the regulation. The revision effects
a substantial simplification of the regulation’s provisions and will make it administratively more
workable.
This revision narrows the scope of the regulation to what the Board considers a minimum con
sistent with the exercise of a stabilizing influence in this area of the economy. In this form, the Board
believes the regulation can be better understood and its merits and defects better appraised. When
present inflationary pressures have subsided, the terms of the regulation would need to be modified
further.
( over)
The principal changes made by the revision are as follows:
1. The list of consumers’ durable goods to which down payment and maturity requirements apply
is reduced from 36 categories to 12, the remaining items including automobiles, major household appli
ances, radios, phonographs, sewing machines, furniture, and soft-surfaced floor coverings, but with an
exemption for any article costing less than $50.00.
2. Restrictions on charge accounts and single-payment loans are eliminated.
3. A uniform maximum maturity of 15 months is established for all new instalment credits,
whether they arise from sales or loans.
4. The provisions for refinancing, including consolidations with new credits, are simplified, and
refinancing credits may have a maximum maturity of 15 months.
5. Except for floor coverings which are transferred to the category calling for a 20 per cent down
payment, the items retained have the same down payment as presently prescribed: 33^ per cent for
all articles other than furniture which is in the 20 per cent category.
6. Procedural rules are simplified in such matters as the statement covering the transaction and
the statement obtained from the borrower. It is no longer required that a statement of the transaction
be given to the customer.
7. Minor changes reconcile the new provisions with such requirements as are retained and certain
technical sections are simplified.
8. The list of articles to which down payment and maturity requirements apply is as follows:
33]/$ per cent down:
Automobiles
Refrigerators
Cooking stoves and ranges
Washing machines
Ironers
Dishwashers
Air conditioners
Radios and phonographs
Sewing machines
Suction cleaners
20 per cent down:
Furniture
Soft-surfaced floor coverings
A copy o f the revised regulation will be forwarded to you as soon as a supply is available
fo r distribution, which will be probably during the course of the next ten days.
In the event you have filed a registration statement with us in accordance with the provi
sions o f the regulation and there has been issued to you a registration certificate, we should
appreciate your cooperation in the follow ing respect. I f you believe, after you have reviewed
the revised regulation, that none o f your activities will be subject to any o f the new require
ments thereof, will you please inform us in writing to this effect, including the necessary facts
which you consider will support such a conclusion.
Additional copies o f this circular, and o f the revised regulation when available, will be
furnished upon request.
A l l a n S proul ,
President.
BOARD OF GOVERNORS
of the
FEDERAL RESERVE SYSTEM
CONSUMER CREDIT
w
REGULATION W
As R evised E ffective D e c e m b e r 1 ,1 9 4 6
INQUIRIES REGARDING THIS REGULATION
A n y in q u iry r e la tin g to th is r e g u la tio n sh o u ld be addressed
to
th e Fed eral
R eserve
B ank
or Federal
Reserve b ra n c h b a n k o f th e d istrict
in w h ich th e in q u iry arises.
R E G U L A T IO N W
C O N SU M E R C R E D IT
CONTENTS
Page
S e c . 1. S cope and A pplication of R e g u l a t io n ........................................................
3
S e c . 2. G e n e r a l R eq u ir em en ts an d R e g is t r a t io n .................................................
3
(а)
(б)
General requirements
Registration and general license
S e c . 3. I n stalm en t S a l e s : G e n e r a l R u l e s ................................................................
(a)
(b)
(c)
S ec . 4. I n stalm en t L o a n s : G e n er a l R u l e s ................................................................
(a)
(fe)
(c)
(d)
(e)
5
General requirements
Statement of changed conditions
Bona fide collection effort; Servicemen’s pre-induction debt
S ec . 6. C er tain T echnical P r o v is io n s ..........................................................................
(a)
(b)
(c)
(d)
(e)
(/)
(g)
(h)
(*)
(j)
(k)
(I)
4
Instalment loans to purchase listed articles
Unclassified instalment loans
Amounts and intervals of instalments; Record
Statement of the borrower
Loans to make down payments prohibited
S ec . 5. R e n e w a l s , R evisio n s , an d A d d it io n s ............................................................
(а)
(б)
(c)
4
Down payment and maturity
Amounts and intervals of instalments
Statement of transaction
7
Special payment schedules for seasonal incomes
Calculating maximum maturity of contract
Record of instalment sale
Extension of credit for mixed purposes
“ Lay-away” plans
Mail orders
Delivery in anticipation of instalment sale
Sets and groups of articles
Evasive side agreements
Side loan to make down payment
Purchase of article in lieu of trade-in
Misuse of coupon plans
S ec . 7. E x e m p t C r e d it s ...........................................................................................................
9
(a)
(b)
(c)
(d)
Business or agricultural loans
Credit to dealers and certain salesmen
Credit to governmental agencies, religious institutions, etc.
Credits under government rehabilitation and readjustment
programs
(e) Loans to pay fire and casualtj' insurance premiums
(/) Credit for purchasing securities
(g) Real estate and home improvement loans
(h) Loans to meet medical expenses, etc.
(i) Disaster credits
S e c . 8. M iscellaneous P r o visio n s ; D e f in it io n s .......................................................
(a)
(b)
(c)
(d)
(e)
(f)
(<7 )
(ih)
11
Preservation of records; Inspections
Suspension of license
Enforceability of contracts
Clerical errors
Non-compliance due to facts outside Registrant’s knowledge
Transactions outside United States
Right of Registrant to impose stricter requirements
Definitions
S upplem ent
14
'
•
REGULATION W
As revised effective December 1, 1946*
C O N S U M E R C R E D IT
SECTION 1.
SCOPE AND APPLICATION 0F REGULATION
This regulation is issued by the Board of Governors of the Federal
Reserve System (hereinafter called the “ Board” ) under authority of
section 5( b) of the Act of October 6, 1917, as amended, and Executive
Order No. 8843, dated August 9,1941 (hereinafter called the “ Executive
Order” ).
The regulation applies, in general, to any person who is engaged in
the business of making extensions of instalment credit in amounts of
$2,000 or less, or discounting or purchasing obligations arising out of
such extensions of credit. It applies whether the person is a bank, loan
company, or finance company, or a person who is so engaged in connec
tion with any other business, such as by making such extensions of
credit as a dealer, retailer, or other person in connection with the sell
ing of consumers’ durable goods.
SECTION 2.
GENERAL REQUIREM ENTS AND REGISTRATION
(a)
General Requirements.— No person engaged in the business of
making instalment sales1 or instalment loans,2 or engaged in the busi
ness of lending on the security of or discounting or purchasing obliga
tions arising out of such extensions of credit, shall, make or receive
any payment which constitutes or arises directly or indirectly out of
any such extension of credit made by him or out of any such obligation
lent on or discounted or purchased by him, except on the following
conditions:
(1) He must be licensed pursuant to this section (any person
so licensed being hereinafter called a “ Registrant” ) ; and
(2) The extension of credit made, renewed, revised or con
solidated by him, or giving rise to the obligation discounted or
purchased by him or acquired by him as collateral, must comply
with the applicable requirements of this regulation.
* This revised regulation shall apply to transactions effected on or after December 1, 1946, and
the revision shall not affect any transaction prior to such date.
1 It is to be noted that “ instalment sale” is defined to include only instalment credit arising out
of the sale of an article listed in the Supplement, hereinafter called a “ listed article.”
2 Both “ instalment sale” and “ instalment loan” are defined to exclude credits in a principal
amount exceeding |2,000.
3
4
REGULATION W
(b )
Registration and General License.— Any person whose license
is not suspended under section 8(6) may become licensed by filing, with
the Federal Reserve Bank or any branch thereof in the district in which
the main office of the Registrant is located, a registration statement on
forms obtainable from any Federal Reserve Bank or branch. Whenever
any person who was not formerly subject to section 2(a) becomes sub
ject thereto, such person is hereby granted a general license for 60 days.
SECTION 3.
IN S T A L M E N T SALES I GENERAL RULES
Except as otherwise permitted by this regulation, each instalment
sale shall comply with the following requirements:
(a) Down Payment and Maturity.— There shall be a down pay
ment not less than that specified for the listed article in the Supple
ment, such down payment to be calculated as therein specified; and
the maturity shall not exceed that specified for the listed article in
the Supplement.
(b) Amounts and Intervals of Instalments.— Except as permitted
by section 6(a) for seasonal incomes, the time balance shall be payable
in instalments which shall be (1) substantially equal in amount or
so arranged that no instalment is substantially greater than any pre
ceding instalment, (2) payable at approximately equal intervals not
exceeding one month, and (3) not less than $5.00 per month or $1.25
per week on the aggregate instalment indebtedness of one debtor to
the same creditor.
(c) Statement of Transaction.— The instalment sale shall be
evidenced by a written instrument or record which shall set forth the
information specified in section 6 (c).
SECTION 4.
IN S T A L M E N T LOANSI GENERAL RULES
Except as otherwise permitted by this regulation, each instalment
loan shall comply with the following requirements:
(a)
Instalment Loans to Purchase Listed Articles.— If the Regis
trant knows or has reason to know that the proceeds of an instalment
loan are to be used to purchase any listed article:
(1) The principal amount lent (excluding any interest or
finance charges and the cost of any insurance) shall not exceed
the maximum loan value specified for the article in the Supple
ment, such loan value to be calculated as therein specified; and
(2) The maturity shall not exceed the maximum maturity speci
fied for the listed article in the Supplement.
REGULATION W
5
(6 ) Unclassified Instalment Loans.— In the case of an instalment
loan which is not subject to section 4 (a ), the maximum maturity shall
not exceed the maximum maturity specified therefor in the Supple
ment.
(c) Amounts and Intervals of Instalments; Record.— Whether
subject to section 4(a) or section 4 (6 ), the instalment loan, except as
permitted by section 6(a) for seasonal incomes, shall be payable in
instalments which shall be (1) substantially equal in amount or so
arranged that no instalment is substantially greater in amount than
any preceding instalment, (2) payable at approximately equal intervals
not exceeding one month, and (3) not less than $5.00 per month or
$1.25 per week on the aggregate instalment indebtedness of one debtor
to the same creditor. It shall be evidenced by a written instrument
or record which shall set forth the terms of payment.
(d) Statement of the Borrower.— No Registrant shall make any
instalment loan subject to section 4(a) or 4(6) unless he shall have
accepted in good faith a signed Statement of the Borrower as to the
purposes of the loan. Such Statement shall state whether or not any of
the proceeds of the loan are to be used to make a down payment on the
purchase of a listed article or to be used to purchase any listed article,
and if any of the proceeds of the loan are to be used for the latter
purpose such Statement shall identify such listed article and shall
state the cash price thereof and the value of any trade-in. If a Regis
trant relies in good faith on the facts set out by the obligor in such
Statement, it shall be deemed to be correct for the purposes of the
Registrant.
(e) Loans to Make Down Payments Prohibited.— A Registrant
shall not make any instalment loan if he knows or has reason to know
that any part of the proceeds thereof is to be used to make a down pay
ment on the purchase price of any listed article.
SECTION S.
REN EW ALS, REVISIONS AND ADDITIONS
(a)
General Requirements.— In the case of an instalment sale or
instalment loan which results from a renewal or revision of any such
credit already outstanding, or which results from the combination of
any such outstanding credit with an additional extension of instalment
credit, the renewed, revised or consolidated obligation shall comply
with all the requirements of this regulation as if it were a new extension
of credit except that:
(1) The requirements as to Statement of Borrower and down
6
REGULATION W
payment or maximum loan value, if any, shall not apply to the
outstanding credit already held by the Registrant; and
(2)
The renewed, revised or consolidated obligation may, in
so far as the maturity and instalment requirements are concerned,
be treated as if it were a new credit with the maximum maturity
calculated from the date of the renewal, revision or consolidation.
The payments on such renewed, revised, or consolidated obligation
shall not be less than $5.00 per month or $1.25 per week on the
aggregate instalment indebtedness of one debtor to the same
creditor.
(b ) Statement of Changed Conditions.— Notwithstanding any
other provision of this regulation, if a Registrant accepts in good faith
a Statement of Changed Conditions as provided in the following para
graph, an extension of instalment credit that refinances any outstand
ing obligation (whether or not such obligation is held by the Registrant
or is itself payable in instalments) may have a maturity not exceeding
that specified in the Supplement for refinancing pursuant to such
Statements, but such maturity shall be applicable only to the credit
refinanced. The payments on the credit refinanced need not be as
large as $5.00 per month c>r $1.25 per week.
The requirements of a Statement of Changed Conditions will be
complied with only if the Registrant accepts in good faith a written
statement signed by the obligor that the contemplated refinancing is
necessary in order to avoid undue hardship upon the obligor or his
dependents resulting from contingencies that were unforeseen by him
at the time of obtaining the original extension of credit or which were
beyond his control, which statement also sets forth briefly the principal
facts and circumstances (1) with respect to the original extension of
credit and (2) with respect to such contingencies, and specifically
states in addition that the contemplated refinancing is not pursuant
to a preconceived plan or an intention to evade or circumvent the
requirements of this regulation.
(c) Bona Fide Collection Effort; Servicemen’s Pre-induction
Debt.— Nothing in this regulation shall be construed to prevent any
Registrant from making any renewal or revision, or taking any action
that he shall deem necessary in good faith (1) for the Registrant’s
own protection in connection with any obligation which is in default
and is the subject of bona fide collection effort by the Registrant, or
(2) with respect to any obligation of any member or former member
of the armed forces of the United States incurred prior to his induction
into such service.
REGULATION W
7
SECTION 6. CERTAIN TECH N ICAL PROVISIONS
(а) Special Payment Schedules for Seasonal Incomes.— If the
income received by an obligor from the main sources of his income
customarily fluctuates materially from month to month or from sea
son to season, the payment schedule may be adapted, within the
applicable maximum maturity, to such customary flow of income,
provided the obligation complies with one or the other of the following
requirements: (1) at least half of the credit is to be repaid within the
first half of the applicable maximum maturity; or (2) payments are
reduced or omitted in not more than 4 months of any calendar year
but are otherwise in equal monthly amounts. In all such cases, a
statement of the facts relied upon shall be preserved in the Registrant’s
files for the life of the obligation.
(б) Calculating Maximum Maturity of Contract.— In calculating
the maximum maturity of an instalment sale or instalment loan, a
Registrant may, at his option, use any date not more than 15 days
subsequent to the actual date of the sale or loan.
(c)
Record of Instalment Sale.— The instrument or record evi
dencing an instalment sale pursuant to section 3(c) shall set forth (in
any order) the following information:
(1) A brief description identifying the article purchased;
(2) The cash price of the article;
(3) The amount of the purchaser’s down payment (i) in cash
and (ii) in goods accepted in trade, together with a brief descrip
tion identifying such goods and stating the monetary value
assigned thereto in good faith;
(4) The amount of any insurance premium for which credit
is extended and of any finance charges or interest by way of dis
count included in the principal amount of the obligation, or the
sum of these amounts;
(5) The time balance owed by the purchaser, which is the sum
of items (2) and (4) minus item (3 ); and
(6) The terms of payment.
The instrument or record need not include a description of the article
if it is purchased by means of a coupon book or similar medium of
instalment credit upon which a cash down payment of at least onethird of its purchase value has been made. The instrument or record
need not include the information called for by items (2) and (4) if the
Registrant is one who quotes to the public a time price for the article
which includes the finance charge if any, provided he sets forth such
time price in such instrument or record, and provided he obtains a
8
REGULATION W
cash down payment which is at least as large as would be required
if the percentage specified for the article in the Supplement were
applicable to the time price.
(d) Extension of Credit for Mixed Purposes.— In case an ex
tension of credit is partly subject to one section of this regulation and
partly subject to another section, the amount and terms of such exten
sion of credit shall be such as would result if the credit were divided
into two or more parts and each part were treated as if it stood alone.
In case an extension of credit is partly subject to this regulation and
partly not subject to the regulation, the amount and terms of such
extension of credit shall be such as would result if the credit were
divided and the part subject to the regulation were treated according
to the applicable provisions of the regulation; the part not subject to
the regulation may be treated as if the regulation did not exist.
(e) “ Lay-away” Plans.— With respect to any extension of credit
involving a bona fide “ law-away” plan, or other similar plan by which
a purchaser makes one or more payments on an article before receiv
ing delivery thereof, the Registrant may, for the purposes of this regu
lation, treat the extension of credit as not having been made until the
date of the delivery of the article to the purchaser.
(/) Mail Orders.— An instalment sale shall not be deemed to be
in violation of the down payment requirement of section 3(a) if the
sale is made upon the receipt of a mail order for one or more articles
and the cash deposit received with the order fails by less than $1.00
to equal the sum of the down payments required by this regulation
for all of the articles included in the order.
(g) Delivery in Anticipation of Instalment Sale.— In case a listed
article is delivered in anticipation of an instalment sale of that article
or a similar article ( such as a delivery “ on approval” , “ on trial” , or
as a “ demonstrator” ), the Registrant shall require, at or before the
time of such delivery, a deposit equal to the down payment that would
be required on such an instalment sale.
( h ) Sets and Groups of Articles.— In determining whether an
article is a “ listed article” , the word “ article” shall be deemed to in
clude any set, group or assembly commonly considered, sold or used
as a single unit, if the component parts thereof are sold or delivered
at substantially the same time.
(i) Evasive Side Agreements.— No extension of credit complies
with the requirements of this regulation if at the time it is made
there is any agreement, arrangement, or understanding (1) by which
the obligation is to be renewed or revised on terms which would permit
REGULATION W
9
final payment to be deferred beyond the date permitted by this
regulation for such credit at its inception, or (2) by which the obligor
is to be enabled to make repayment on conditions inconsistent in
any other respect with those required by this regulation, or (3) by
which there is to be any evasion or circumvention, or any concealment
of any evasion or circumvention, of any requirement of this regulation.
(j ) Side Loan to Make Down Payment.— A Registrant shall not
make an extension of instalment credit to finance the purchase of any
listed article if he knows or has reason to know that there is, or that
there is to be, any other extension of credit of any kind in connection
with the purchase of the listed article which would bring the total
amount of credit extended in connection with such purchase beyond the
amount of instalment credit permitted by this regulation; but, if the
Registrant accepts in good faith a written statement signed by the
obligor that no such other extension exists or is to be made, such state
ment shall be deemed to be correct for the purposes of the Registrant.
(/c) Purchase of Article in Lieu of Trade-in.— Anything which
the seller of a listed article buys, or arranges to have bought, from
the purchaser at or about the time of the purchase of the listed article
shall be regarded as a trade-in for the purposes of this regulation.
(I)
Misuse of Coupon Plans.— No coupon, ticket or similar medium
of credit, whether paid for in instalments or otherwise, shall be ac
cepted by any Registrant in payment, in whole or in part, for any
listed article if such acceptance, in effect, would permit the article to
be sold on terms not complying with the requirements of this regulation.
SECTION
7. E X E M P T CREDITS
This regulation shall not apply to any of the following:
(a) Business or Agricultural Loans.— Any loan for business pur
poses to a business enterprise or for agricultural purposes to a person
engaged in agriculture, provided the loan is not for the purpose of
purchasing a listed article.
( b ) Credit to Dealers and Certain Salesmen.— Any extension of
credit to a wholesaler or retailer to finance the purchase of any article
for resale, or any extension of credit which is made to a bona fide
salesman of automobiles in order to finance the purchase of a new
automobile to be used by him principally as a demonstrator.
(c) Credit to Governmental Agencies, Religious Institutions,
etc.— Any extension of credit to the Federal Government, any State
government, any political subdivision, or any department, agency or
establishment thereof, or to any church, hospital, clinic, sanitarium,
10
REGULATION W
school, college, or other religious, educational, charitable, or eleemosy
nary institution.
(d) Credits Under Government Rehabilitation and Readjust
ment Programs.— Any extension of credit (1) made by the Land
Bank Commissioner on behalf of the Federal Farm Mortgage Corpora
tion or by any Federal land bank and found, pursuant to regulations
issued by the Commissioner, to be necessary to maintain or increase
production of essential agricultural commodities, (2) made or insured
by the Farmers’ Home Administration, (3) made in accordance with
the regulations of the Secretary of the Interior for the economic de
velopment or rehabilitation of Indians, (4) made by the Disaster Loan
Corporation, or (5) made, guaranteed or insured in whole or in part
by the Administrator of Veterans’ Affairs pursuant to the provisions
of Title III of the Servicemen’s Readjustment Act of 1944, or by any
State agency pursuant to similar State legislation.
(e) Loans to Pay Fire and Casualty Insurance Premiums.—Any
loan to finance a premium in excess of one year on a fire or casualty
insurance policy, if the loan is fully secured by the unearned portion
of such premium.
(/) Credit for Purchasing Securities.— Any extension of credit
which is subject to the Board’s regulations under the Securities Ex
change Act of 1934 or which is otherwise for the purpose of purchasing
or carrying stocks, bonds, or other investment securities.
( g ) Real Estate and Home Improvement Loans.— Any extension
of credit which is for the purpose of financing or refinancing (1) the
construction or purchase of an entire residential building or other
entire structure or (2) repairs, alterations, or improvements upon
urban, suburban or rural real property in connection with existing
structures, except to the extent that such repairs, alterations, or im
provements incorporate any listed article.
(h) Loans to Meet Medical Expenses, etc.—Any loan as to which
the Registrant accepts in good faith a written statement signed by
the borrower certifying that the proceeds are to be used for bona fide
educational, medical, hospital, dental, or funeral expenses, or to pay
debts incurred for such expenses, and that such proceeds (unless they
are to be used exclusively for educational expenses) are to be paid
over in amounts specified in such statement to persons whose names,
addresses, and occupations are stated therein.
(/) Disaster Credits.— Any extension of credit to finance the repair
or replacement of property damaged or lost as a result of a flood or
other similar disaster which the Federal Reserve Bank of the district
REGULATION W
11
in which the disaster occurred finds has created an emergency affect
ing a substantial number of the inhabitants of the stricken area, pro
vided such extension is made prior to the end of the sixth calendar
month following the month in which the disaster occurred and a state
ment describing the damage or loss is preserved in the Registrant’s
files.
SECTION 8. M ISCELLANEOUS PROVISION S; DEFINITIONS
(a) Preservation of Records; Inspections.— Every Registrant
shall preserve, for the life of the obligation to which they relate, such
books of account, records, and other papers (including any statements
required by or obtained pursuant to this regulation) as are relevant
to establishing whether or not an extension of credit within the scope
of this regulation was in conformity with the requirements thereof,
provided, however, that the Registrant may preserve photographic
reproductions in lieu of such books of account, records or papers.
For the purpose of determining whether or not there has been com
pliance with the requirements of this regulation, every person re
quired to be licensed under section 2(a) shall permit the Board or any
Federal Reserve Bank by its duly authorized representatives, to make
such inspections of his business operations as the Board or Federal
Reserve Bank may deem necessary or appropriate, including inspec
tions of books of account, contracts, letters or other relevant papers
wherever located, and, for such purpose, shall furnish such reports as
the Board or the Federal Reserve Bank may require. When ordered
to do so by the Board, every such person shall furnish, under oath or
otherwise, such information relative to any transaction within the
scope of the Executive Order as the Board may deem necessary or
appropriate for such purpose, including the production of books of
account, contracts, letters or other papers in the custody or control
of such person.
(b ) Suspension of License.3— The license of any Registrant may,
after reasonable notice and opportunity for hearing, be suspended by
the Board, in its entirety or as to particular activities or particular
offices or for specified periods, on any of the following grounds:
(1)
Any material misstatement or omission willfully or negli
gently made in the registration statement;
3 In addition, any Registrant who willfully violates or knowingly participates in a violation of
this regulation is subject to the penalties prescribed in section 5(6) of the Act of October 6, 1917.
as amended, which reads in part as follows: “ Whoever willfully violates any of the provisions of
this subdivision or of any license, order, rule, or regulation issued thereunder, shall, upon conviction,
be fined not more than 110,000, or, if a natural person, may be imprisoned for not more than ten
years, or both; and any officer, director, or agent of any corporation who knowingly participates
in such violation may be punished by a like fine, imprisonment, or both.”
12
REGULATION W
(2)
Any willful or negligent failure to comply with any pro
vision of this regulation or any requirement of the Board pur
suant thereto.
A license which is suspended for a specified period will again be
come effective upon the expiration of such period. A license which is
suspended indefinitely may be restored by the Board, in its discretion,
if the Board is satisfied that its restoration would not lead to further
violations of this regulation and would not be otherwise incompatible
with the public interest.
(c) Enforceability of Contracts.— Except as may subsequently be
otherwise provided, all provisions of this regulation are designated,
pursuant to section 2{ d) of the Executive Order, as being “ for admin
istrative purposes” within the meaning of said section 2 (d ), which
provides that noncompliance with provisions of the regulation so
designated shall not affect the right to enforce contracts.
(d) Clerical Errors.— Any failure to comply with this regulation
resulting from a mistake in determining, calculating, or recording any
price, down payment, or extension of credit, or other similar matter,
shall not be construed to be a violation of this regulation if the Regis
trant establishes that such failure to comply was the result of excusable
error and was not occasioned by a regular course of dealing.
(e ) Non-Compliance Due to Facts Outside Registrant’s Knowl
edge.— The prohibitions of this regulation shall not apply to a Regis
trant with respect to any failure to comply with this regulation in
connection with (1) an extension of credit made by him if, at the time
he made it, he did not know or have reason to know any fact by reason
of which such extension failed to comply; (2) an obligation purchased,
discounted or acquired as collateral by him if, when he purchased or
discounted the obligation or acquired it as collateral, the obligation
did not show on its face any failure to comply and he did not know
any fact by reason of which the extension of credit giving rise to the
obligation failed to comply; or (3) an obligation renewed, revised, or
consolidated by him if, at the time when he renewed, revised or con
solidated it, he did not know or have reason to know any fact by
reason of which such renewal, revision or consolidation failed to com
ply. With respect to any loan on the security of an obligation which
arises out of an extension of credit subject to this regulation, the
prohibitions of this regulation shall be deemed to apply only to pay
ments arising out of the obligation rather than to payments arising
out of the loan.
(/) Transactions Outside United States.—Nothing in this regula
tion shall apply with respect to any extension of credit made in Alaska,
REGULATION W
13
the Panama Canal Zone, or any territory or possession outside the
continental United States.
(g) Right of Registrant to Impose Stricter Requirements.— Any
Registrant has the right to refuse to extend credit, or to extend less
credit than the amount permitted by this regulation, or to require that
repayment be made within a shorter period than the maximum per
mitted by this regulation.
(h) Definitions.— For the purposes of this regulation, unless the
context otherwise requires:
(1) “Person” means an individual, partnership, association, or
corporation.
(2) “ Registrant” means a person who is licensed pursuant to
section 2(b).
(3) “Extension of Credit” has the meaning given it in the
Executive Order.4
(4) “ Instalment Credit” means an extension of credit which
the obligor undertakes to repay in two or more scheduled pay
ments or as to which the obligor undertakes to make two or more
scheduled payments or deposits usable to liquidate the credit, or
which has a similar purpose or effect.
(5) “ Instalment Sale” means an instalment credit in a prin
cipal amount of $2,000 or less which is made as principal, agent
or broker, by any seller of any consumers’ durable good listed in
the Supplement to this regulation (herein called a “ listed article” )
and which arises out of a sale of such listed article. For this
purpose, “ sale” includes a lease, bailment, or other transaction
which is similar in purpose or effect to a sale.
(6) “Instalment Loan” means an instalment credit, other than
an instalment sale, in the form of a loan which is in a principal
amount of $2,000 or less; but the definition does not include any
loan upon the security of any obligation which arises out of any
instalment sale or instalment loan.
(7) “ Cash Price” means the bona fide cash purchase price of
an article, including the bona fide cash purchase price of any
accessories, any bona fide delivery, installation and service charges
(other than interest, finance or insurance charges), and any ap
plicable sales taxes.
4 The pertinent part of the Executive Order reads as follows: “ Extension of credit” means any
loan or mortgage; any instalment purchase contract, any conditional sales contract, or any sale or
contract of sale under which part or all of the price is pavable subsequent to the making of such
sale or contract; any rental-purchase contract, or any contract for the bailment or leasing of
property under which the bailee or lessee either has the option of becoming the owner thereof or
obligates himself to pay as compensation a sum substantially equivalent to or in excess of the
value thereof; any contract creating any lien or similar claim or property, to be discharged by the
payment of money; any purchase, discount, or other acquisition of or any extension of credit
upon the security of, any obligation or claim arising out of any of the foregoing; and any transac
tion or series of transactions having a similar purpose or effect
14
REGULATION W
SUPPLEM ENT TO REGULATION W
Effective December 1, 1946
Part 1. Listed Articles, Maturities, Down Payments, Loan Values.
— For the purposes of Regulation W, the following articles, whether
new or used, are “ listed articles” , and the following maximum maturi
ties, required down payments and maximum loan values are pre
scribed (such down payments and loan values to be calculated as
specified in Parts 4 and 5 of this Supplement ) ; but no article having a
cash price of less than $50.00 shall be considered a listed article:
Group A—15 months maximum maturity, 33Ys Ver cent minimum
down payment, 66% per cent maximum loan value:
1. Automobiles (passenger cars designed for the purpose of trans
porting less than 10 passengers, including taxicabs).
Group B—15 months maximum maturity, 33ys per cent minimum
down payment, 66% per cent maximum loan value:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Cooking stoves and ranges, designed for household use.
Dishwashers, mechanical, designed for household use.
Ironers designed for household use.
Refrigerators, mechanical, of less than 12 cubic feet rated stor
age capacity (including food freezers).
Washing machines designed for household use.
Combination units incorporating any listed article in the fore
going classifications of this Group B.
Air conditioners, room unit.
Radio receiving sets, phonographs, or combinations.
Sewing machines designed for household use.
Suction cleaners designed for household use.
Group C— 15 months maximum maturity, 20 per cent minimum down
payment, 80 per cent maximum loan value:
1. Furniture, household, (including ice refrigerators, bed springs,
mattresses and lam ps); and floor coverings, soft surface.
Part 2. Unclassified Instalment Loans.—The maximum maturity
of any instalment loan subject to section 4(b) shall be 15 months.
P art 3. Refinancing Pursuant to Statement o f Changed Condi
tions.— The maximum maturity of any refinancing pursuant to a
Statement of Changed Conditions as specified in section 5(b) shall be
18 months.
P art 4. Calculation o f Down Payments fo r Autom obiles.— In the
case of a new automobile, the required down payment and maximum
loan value shall be the specified percentage of the cash price; and such
REGULATION W
15
down payment may be obtained in the form of cash, trade-in, or both.
The same rule shall apply in the case of a used automobile, except
that after January 1, 1947, the maximum loan value shall be the
specified percentage of the cash price or of the “ appraisal guide value” ,
whichever is lower, and the required down payment shall be the
difference between the cash price and the maximum loan value as so
calculated.
“ Appraisal guide value” means the estimated average retail value
as stated in such edition of any regularly published automobile ap
praisal guide as the Board may designate for this purpose for use in
the territory in which such used automobile is sold, plus any applica
ble sales taxes. Information as to the guide or guides designated for
any given territory may be obtained from any Federal Reserve Bank
or branch.
Part 5. Calculation o f Down Payments fo r Articles in G roup B
or G roup C.— If any article is traded in by the purchaser on an
article listed in Group B or Group C, the required down payment
and the maximum loan value shall be the specified percentage of the
net price of the article after deducting from the cash price the amount
allowed for the trade-in; and such down payment shall be obtained in
cash in addition to the trade-in.
LIST OF FEDERAL RESERVE BANKS AND BRANCHES
Address
Federal Reserve Bank of
BOSTON
30 Pearl Street. Boston 6. Massachusetts
NEW YORK
Buffalo Branch
33 Liberty Street. New York 7, New York
270-276 Main Street, Buffalo 5, New York
PHILADELPHIA
925 Chestnut Street. Philadelphia 1. Pennsylvania
CLEVELAND
East 6th Street and Superior Avenue. Cleveland 1,
Ohio
4th and Race Streets. Cincinnati 1, Ohio
717 Grant Street. Pittsburgh 19. Pennsylvania
Cincinnati Branch
Pittsburgh Branch
RICHM OND
Baltimore Branch
Charlotte Branch
9th and Franklin Streets, Richmond 13. Virginia
Calvert and Lexington Streets. Baltimore 3, Maryland
South Tryon and 2nd Streets, Charlotte 1, North
Carolina
ATLANTA
Birmingham Branch
104 Marietta Street. Atlanta 3. Georgia
18th Street and 5th Avenue, North, Birmingham 2,
Alabama
Church and Hogan Streets. Jacksonville 1, Florida
228 3rd Avenue. North, Nashville 3, Tennessee
Carondelet and Common Streets. New Orleans 11,
Louisiana
Jacksonville Branch
Nashville Branch
New Orleans Branch
CHICAGO
Detroit Branch
230 South LaSalle Street, Chicago 90, Illinois
160 Fort Street, West, Detroit 31, Michigan
ST. LOUIS
Little Rock Branch
Louisville Branch
Memphis Branch
411
121
5th
3rd
MINNEAPOLIS
Helena Branch
73 South 5th Street, Minneapolis 2. Minnesota
Park Avenue and Lawrence Street, Helena, Montana
KANSAS C ITY
10th Street and Grand Avenue, Kansas City 18, Mis
souri
17th and Arapahoe, Denver 17, Colorado
226 West 3rd Street, Oklahoma City 1, Oklahoma
1701-5 Dodge Street, Omaha 2, Nebraska
Denver Branch
Oklahoma City Branch
Omaha Branch
Locust Street, St. Louis 2. Missouri
West 3rd Street, Little Rock, Arkansas
and Market Streets, Louisville 1, Kentucky
and Jefferson Streets, Memphis 1, Tennessee
DALLAS
El Paso Branch
Houston Branch
San Antonio Branch
W ood and Akard Streets. Dallas 13, Texas
351 Myrtle Avenue, El Paso, Texas
1301 Texas Avenue. Houston 1, Texas
Navarro and Villita Streets, San Antonio 6, Texas
SAN FRANCISCO
Sacramento and Sansome Streets, San Francisco 20,
California
409 West Olympic Boulevard, Los Angeles 54, Cali
fornia
6th and Oak Streets, Portland 8. Oregon
70 East South Temple Street, Salt Lake City 9, Utah
2nd Avenue and Spring Street, Seattle 14, Washington
Los Angeles Branch
Portland Branch
Salt Lake City Branch
Seattle Branch
FEDERAL RESERVE SYSTEM
BOUNDARIES OF F ED E RA L R E S E R V E D ISTRICTS
AND THEIR BRANCH TERR IT O R IES
mam---BOUNDARIES OF FED ER A L R E S E R V E D ISTRICTS
----------BOUNDARIES OF FED ERA L R E SE R V E BRANCH T ER R IT O R IES
•
BOARD OF GOVERNORS OF TH E F E D E R A L R E S E R V E SY ST E M
•
F E D E R A L R E S E R V E BANK C IT IE S
•
F E D E R A L R E S E R V E BRANCH C IT IES
@FedFRASER