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FEDERAL RESERVE BANK OF NEW YORK rCircular No. 6 3 1 8 '1 April 10, 1969 J I REGULATION Z — TRUTH IN LENDING Proposed Guidelines to Exempt State-Regulated Credit Disclosures from Regulation Z To All State Member BanTcs, and Others Concerned, in the Second Federal Reserve D istrict: P r in t e d b e lo w is a n e x c e r p t f r o m th e Federal Register o f A p r i l 9, c o n t a in in g th e te x t o f a p r o p o s e d S u p p le m e n t I I to R e g u la t io n Z th a t w o u ld e s ta b lis h g u id e lin e s f o r th e e x e m p tio n o f S ta te r e g u la te d c r e d it d is c lo s u r e s f r o m F e d e r a l tr u t h -in -le n d in g re q u ir e m e n ts . C o m m e n ts t h e r e o n s h o u ld b e s u b m itte d b y A p r i l 30 a n d m a y b e sen t to o u r B a n k E x a m in a tio n s D e p a r tm e n t. A d d it io n a l c o p ie s o f th is c ir c u la r w ill b e fu r n is h e d u p o n re q u e s t. A lfred H ayes, President FEDERAL RESERVE SYSTEM [1 2 CFR Part 226 1 [R eg. Z ] TRUTH IN LENDING State Exemption Procedures and Criteria The Board of Governors of the Fed eral Reserve System is considering the adoption of the following Supplement n to Part 226 (Regulation Z ), containing procedures and criteria under which any State may apply for an exemption from Chapter 2 of the Truth in Lending Act, which is Title I of the Consumer Credit Protection Act (Public Law 90-321, 82 Stat. 146). The Federal Truth in Lending Act, which becomes effective on July 1, 1969, provides in section 123 that the Board shall exempt from the requirements of Chapter 2 of the Act “any class of credit transactions within any State if it determines that under the law of that State that class of transactions is sub ject to requirements substantially simi lar to those imposed,” by the Federal law, and “that there is adequate provi sion for enforcement.” The Truth in Lending provisions relating to the ad vertising of credit do not fall within Chapter 2 of the Act, and consequently will remain subject to Federal jurisdic tion although a State may otherwise have obtained an exemption for a class of credit transactions. 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. To aid in the consideration of this matter by the Board, interested persons are invited to submit relevant data, views, or arguments. Such comments should be submitted in writing to the Board by April 30, either directly or through the 12 Federal Reserye Banks. (15 U.8.C. 1601-1605) Dated at Washington, D.C., this 1st day of April 1969. By order of the Board of Governors. [ seal] R obert P. F orrestal, Assistant Secretary. S upplem en t procedures and II to c r it e r ia R e g u l a t io n under Z w h ic h a n t STATE M A T A P P L Y FOR E X E M P T IO N P U R S U A N T T O PARAGRAPH (A ) O F § 2 2 6 . 1 2 (a ) Procedure. A n y S tate m ay m ake a p p li c a tio n to th e B oard fo r its d eterm in a tion th a t un d er th e laws o f th a t S ta te,1 an y class o f tra n saction s w ith in th a t S ta te Is s u b je c t to requ irem en ts su b sta n tia lly sim ilar to th o se requ irem en ts Im posed u n d er C hapter 2 o f th e A ct * an d th a t there Is a d equ ate p r o v isio n fo r e n fo rcem en t. S u ch d eterm in a tion sh all c o n s titu te an e x em p tion o f su ch class o f tra n saction s fr o m th e requ irem en ts o f C hapter 2 o f th a t A ct. A ny su ch a p p lica t io n sh all b e : (1 ) M ade w ith resp ect t o an y class o f tra n sa ction s d escribed In su bp aragra ph ( c ) ( 1 ) w h ich in volves cred itors w h o ex ten d, arrange to exten d, offer to exten d, or offer to arrange to ex ten d con su m er cred it in c o n n e c tio n w ith su ch tra n saction s w ith in th e S tate; and (2 ) M ade b y letter addressed to th e B oard, signed by an a p p rop riately a u th o r ized officer o f th e State, .and su b m itte d In trip lica te o f w h ich on ly th e origin al need be signed. (b ) Supporting documents. E ach co p y o f th e a p p lica tio n shall be a ccom p a n ied b y : (1 ) A co p y o f the a u th oriz a tion u n d er w h ich th e a p p lica tion is filed; (2 ) A co p y o f th e laws o f th e Sta te w h ich th e a p p lica n t m a in ta in s to be su b sta n tia lly 1 A ny reference to S tate law in S u p p lem en t II Includes a referen ce t o an y reg u lation s w h ich Im plem en t S tate law, an d to ap p li ca b le ju d ic ia l d ecision s. •A ny referen ce t o C hapter 2 o f th e A ct or an y se ctio n th e re o f In S u p p lem en t II in clu d e s a referen ce to th e Im plem en tin g p rov ision s o f th is part. sim ilar in req u irem en ts to th ose req u ire m en ts im p osed u n d er C hapter 2 o f th e A ct; (3 ) A sta tem en t b y legal cou n sel fo r th e S ta te settin g fo r th d eta iled com p a rison s o f th e requ irem en ts o f S tate law an d th e re q u irem en ts o f C h a pter 2 o f th e A ct w ith su p p o rtin g o p in io n s an d reasons sh ow in g th a t ap p lica b le req u irem en ts o f S tate law are su b sta n tia lly sim ila r to those im posed un d er C h a pter 2 o f th e A ct, th a t any d ifferences are n o t in c o n s iste n t w ith th e req u irem en ts o f C h a pter 2 o f th e A ct, an d th a t there are n o oth er S tate laws w h ich are In con sisten t w ith th e req u irem en ts o f C h a pter 2 o f th e A ct. (4 ) A co p y o f th e laws o f the S tate w h ich p rov id e fo r en fo rce m e n t o f th e S ta te laws referred to in su bp aragra ph (2 ) o f th is p ara graph ; an d (5 ) A sta tem en t b y legal cou n sel fo r th e S tate w ith su p p ortin g o p in io n an d reasons sh ow in g th a t p rov ision s o f S tate law referred to in su bp aragra ph (4 ) o f th is paragraph w ith regard to a d m in istra tiv e e n fo rce m e n t, c rim in a l lia b ility fo r w illfu l an d k n o w in g v iola tion , civ il lia b ility fo r fa ilu re to m ake re q u ired disclosures, an d rem edies fo r In cor r e ct d isclosu res c o n s titu te a d equ ate p rov ision fo r en forcem en t. (c ) Criteria for determination. T h e B oard w ill con sid er th e fo llo w in g criteria in m ak in g a d e term in a tion o f w h eth er th e law o f a Sta te Im poses req u irem en ts su b sta n tia lly sim ilar to th ose req u irem en ts Im posed un d er C hapter 2 o f th e A ct, an d w h eth er th ere is ad equ ate p rov ision fo r e n fo rc e m e n t o f su ch law s: (1 ) A class o f tra n sa ction s sh all b e : (1) T ra n sa ction s u n d er op en en d c on su m er cre d it p lans w h ich are s u b je c t t o th e re qu irem en ts o f se ction 127 o f th e A ct; (II) C onsu m er c re d it sale tra n sa ction s n o t u n d er o p en end c re d it p lan s w h ich are s u b je c t to th e requ irem en ts o f se ctio n 128 o f th e A ct; or (III) C on su m er loa n tra n sa ction s not u n d er o p en end c red it p lan s w h ich are s u b je c t to th e requ irem en ts o f se ctio n 129 o f th e A ct. (2 ) In order fo r req y ire m e n ts o f S ta te law to be su b sta n tia lly sim ila r to req u irem en ts im p osed u n d er C h a pter 2 o f th e A ct, th e p rov ision s o f S tate la w 3 shall requ ire th a t : »T h is paragraph is n o t t o b e c o n stru e d as In d ica tin g th a t th e B oard w o u ld c on sid er (over) ln g v io la tion ; ( i ) C reditors m ake d isclosu res an d deliver tin u es to be ad equ ate p rov ision fo r e n fo r c e n o tic e s in fo r m , c o n te n t, and te rm in o lo g y (iii) C ivil lia b ility fo r fa lu re t o m ake re m en t o f su ch law, any S tate w h ich receives and u n d e r d e fin itio n s an d rules o f c o n s tr u c qu ired d isclosu res; and an ex em p tion shall in fo rm th e B oard w ith in tio n p rescribed in th is part; (iv ) R em edies ror in co rre ct disclosures. 30 days o f the occu rren ce o f any chan ge in (ii ) C reditors m ak e d isclosu res o f th e (d ) Exemption from requirements of Chap its related law, and shall file w ith th e B oard fin a n ce ch arge d e term in ed as p rescribed in ter 2. I f th e B oard d eterm in es th a t u n d er the fr o m tim e t o tim e su ch reports as the B oard § 226.4; law o f a S tate an y class o f tra n saction s is m ay require. T h e report o f any su ch ch an ge (iii) C reditors m ake d isclosu res o f the a n s u b je c t to requ irem en ts su b sta n tia lly sim ilar sh all co n ta in copies o f th at ch an g e togeth er n u a l p ercen tag e rate d eterm in ed as p re t o th ose requ irem en ts im posed u n d er C h a p w ith statem en ts settin g fo r th th e in fo rm a scrib ed in § 226.5; ter 2 o f th e A ct and th a t u n d er th e law o f tio n an d o p in ion s w ith respect to th a t ch an ge (iv ) C ustom ers sh all have a r ig h t to re th a t S tate there is ad equ ate p rov ision fo r as specified in su bparagraph s (3 ) and (5 ) scin d c e rta in tra n sa ction s an d w ill be o f paragraph ( b ) . e n fo rce m e n t, th e B oard w ill e x em p t su ch a fforded rem edies in ev en t o f rescission as class o f tra n sa ction s in th a t State from th e (4 ) T h e B oard w ill in fo rm any S tate w h ich p rov id ed in § 226.9; req u irem en ts o f C hapter 2 o f th e A ct in th e receives an ex em p tion o f an y su b seq u en t (v ) C reditors m ake delivery o f requ ired fo llo w in g m an n er an d S u b ject to th e fo l a m en d m en ts to C hapter 2 o f th e A ct (o r the d isclosu res an d n o tice s in th e circu m sta n ce s lo w in g c o n d itio n s : im p le m e n tin g p rovision s o f this p a rt) w h ich a n d a t th e tim e p rescribed in §§ 226.7, 226.8, (1 ) T h e p rop osed ex em p tion w ill be p u b m ig h t ca ll fo r am en d m en t o f S tate law or a n d 226.9, as ap p licab le, an d i f th e C o m lish ed as a n o tic e o f p rop osed rule m ak in g in regu lation s; p arativ e In d ex o f C redit C ost is p erm itted th e F e d e r a l R e g i s t e r , an d tim e w ill be a l (5 ) T h e B oard reserves th e righ t t o revoke or requ ired to be d isclosed, in a ccord a n ce low ed fo r w ritten com m en ts to be su b m itted an y su ch ex em p tion Issued to a State if u p on w ith § 226.11; and t o th e B oard; review it fin ds th a t th e law o f th at Sta te n o (v i) C reditors co m p ly w ith general d is (2 ) I f an d w h en th e B oard issues its lon g er im poses requ irem en ts w h ich are s u b c losu re requ irem en ts prescribed in a c c o rd ex e m p tio n o f a class o f tra n saction s w ith in sta n tia lly sim ilar to th ose requ irem en ts im a n ce w ith paragraphs ( a ) , ( d ) , an d (i) o f an y S tate fro m th e requ irem en ts Im posed posed u n d er C hapter 2 o f th e A ct o r th a t § 226.6. u n d e r C hapter 2 o f the A ct, th e official w ho un d er State law there IS n o lon g er ad equ ate (3 ) In d e te rm in in g w h eth er p rov ision fo r m ade a p p lica tion fo r su ch ex em p tion w ill be p rov ision fo r e n fo rc e m e n t; an d e n fo rc e m e n t o f S tate law referred to in s u b so n o tified in w ritin g, an d n o tice o f th e (6 ) In th e ev en t o f rev oca tion o f an y su ch paragraph (2 ) o f this paragraph is adequ ate, e x e m p tio n w ill be p u b lish ed In th e F e d e r a l ex em p tion , n o tice o f su ch rev oca tion sh all be c on sid e ra tio n w ill be given to th e e x ten t to R e g is t e r ; p u blish ed in the F e d e r a l R e g i s t e r an d c o m w h ic h S tate law p rovides f o r : (3 ) D u rin g th e tim e th a t any s u ch ex em p m u n ica ted to an ap p rop riate State official, (i) A d m in istrativ e e n fo rce m e n t; tio n is in effect, in order th a t th e B oard m ay an d th e class o f tra n saction s affected w ith in (ii) C rim inal lia b ility fo r w illfu l and k n ow be in a p osition to d eterm in e w h eth er the t h a t S ta te sh all th e n be s u b je c t to th e re S tate law con tin u e s to Im pose requ irem en ts qu irem en ts o f C hapter 2 o f the A ct. adversely an y a d d itio n a l req u irem en ts o f su b sta n tia lly sim ilar to th ose requ irem en ts S ta te law w h ich are n o t in co n s iste n t w ith th e Im posed un d er C hapter 2 o f th e A ct w ith p u rp o se o f th e A c t o r th e requ irem en ts im [F .R . D oc. 69-4092; F iled, Apr. 8, 1969; resp ect to th e class o f tra n sa ction s t o w h ich p osed u n d e r C h a pter 2 o f th e A ct. th e ex e m p tion applies, an d th a t there c o n 8:4 5 a.m .]
@FedFRASER