Full text of Federal Reserve Bank of New York Circulars : 6526. Proposed Amendment to Regulation Z

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FE D E R A L R E S E R V E BANK
O F N E W YORK
C i r c u l a r N o . 6526
A p ril 2 1 , 1970

PR O PO SED AMENDMENT TO REGULATION Z
L a te P aym ent, D elinquency, D efau lt,
and R e in sta te m e n t C h arg e s

To A ll S ta te M ember B a n k s, and O th e rs C on cern ed,
in th e S econ d F e d era l R e s e r v e D is tr ic t:

Printed below is an excerpt from the Federal R egister of April 18, containing the text
of a proposed amendment issued by the Board of Governors of the Federal R eserve System
to its Truth in Lending Regulation Z. Comments thereon should be received by not later
than May 22 and may be submitted to our Consumer Information and Securities Regulations
Department.
Additional copies of this circular w ill be furnished upon request.
Alfred Hayes,
President.

FEDERAL RESERVE SYSTEM
[12 CFR Part 226 1
[Reg. Z]

TRUTH IN LENDING
Late Payment, Delinquency, Default,
and Reinstatement Charges
Pursuant to the authority contained
in the Truth in Lending Act (15 U.S.C.
1601), the Board of Governors is con­
sidering amending § 226.4(c) of Part 226
to read as follows:

ment in full or of a specified amount is
required when billed, and in the ordinary
course of business the obligor is per­
mitted to continue to have purchases or
other obligations debited to the account
after the imposition of such charge, such
charge is a finance charge instead of a
late payment or other such charge, and
the disclosures required under § 226.7
shall be made.

The proposed amendment consists of
the addition of a second sentence to
existing § 226.4(c). That sentence would
incorporate into the regulation itself the
§ 2 2 6 .4 D eterm in ation
of
fin an ce
substance of an interpretation (§ 226.charge.
401) issued by the Board on April 22,
*
*
*
*
*
1969, which states the proper treatment
(c)
L a te p a y m e n t, d e lin q u e n c y , d e ­ of charges that are labeled late payment,
delinquency, default and reinstatement,
fa u lt, a n d r e in s ta te m e n t c h a rg e s. A late
payment, delinquency, default, rein­ when imposed on an account which is or
statement, or other such charge is not a may be debited from time to time for
finance charge if imposed for actual un­ purchases or other obligations. Such ac­
anticipated late payment, delinquency, counts might be either so-called 30-day
default, or other such occurrence. How­ accounts or open end credit accounts.
ever, where such charge is imposed on The proposed amendment—like the in­
an account which is or may be debited terpretation—specifies the circumstances
from time to time for purchases or other in which such charges are, in fact, con­
obligations and, under its terms, pay­ sidered finance charges requiring dis­




closures under § 226.7 “Open end credit
accounts—specific disclosures.”
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 and to assist the
Board in determining whether any
changes should be made in the future
treatment of these or similar charges,
interested persons are invited to submit
relevant data, views, or arguments. Any
such material should be submitted in
writing to the Secretary, Board of Gov­
ernors of the Federal Reserve System,
Washington, D.C. 20551, to be received
not later than May 22, 1970. Such mate­
rial will be made available for inspection
and copying upon request, except as pro­
vided in § 261.6(a) of the Board's Rules
Regarding Availability of Information.
By order of the Board of Governors,
April 9, 1970. ^
. T,
K en ne t h A. K e n y o n ,
[ seal ]
D e p u ty S e c r e ta r y .
[F.R. Doc. 70-4783; Filed, Apr. 17, 1970;
8:48 a.m.]