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For release on delivery Statement by Jeffrey M. Bucher M em ber, Board of Governors of the F e d e ra l R e s e rv e System before the Subcommittee on Consumer A ffa ir s of the C om m ittee on Banking, Housing, and Urban A ffa ir s United States Senate July 17, 1975 I appreciate the opportunity to appear before this Subcommittee to o ffe r the views of the F ed eral R e se rv e Board on proposed legislation dealing with the Equal Credit Opportunity A ct and consumer leasing. T h ree bills are before the com m ittee which would amend the Equal C redit Opportunity Act: II.R . 6516, S. 483 and S. 1927. Two le g is lative proposals to regulate consumer leasing, S. 1900 and S. 1961 are also under consideration. 1 would firs t like to address m yself to the suggested amendments to the Equal C redit Opportunity Act. The three Equal Credit Opportunity b ills would add new classes to the existing categories of sex and m arital status. Ti.R. 6516 would add the categories of race, color, religion , national origin and age. S. 1927 would amend the A ct to include not only those categories covered by H .R . 6516 but also discrim ination based on a person's political affiliation, receip t of public assistance benefits, ex ercise of rights under the Act o r other provisions of law and such other classifications as the Board may establish by regulation. In contrast, S. 483 would simply amend the existing law to prohibit d is crim ination on the basis of an "a rb itra ry age lim it". Let me begin by stating, as I did before the House Subcommittee on Consumer A ffa irs on A p ril 22 of this yea r, that the Board strongly f&vors the elimination in credit transactions of all discrim ination based on factors other than an individual's creditworthiness. Although there is no lega l right to rec eive credit, the Board believes a great deal can be done to assure that credit is made available to equally creditworthy - people on a just and fair basis. 2 - The denial of credit based upon a person's membership in a group without reference to that individual's qualifications works to the economic disadvantage of applicants and creditors alike. It is because we believe that fair and equal access to credit is a matter of great importance that the Board recommends that Congress delay enactment of this legislation until there has been sufficient oppor tunity to benefit from experience in implementing the regulations under the sex and marital status provisions of the Equal Credit Opportunity Act which goes into effect in Octobcr of this year. In the course of our preparation of this regulation we have developed an increased appreciation of the many complexities involved in implementing the requirements of this type of legislation. Based upon our experience to date, we feel that the Equal Credit Opportunity Act should not be extended without a thorough exploration, delineation and resolution of the basic issues present in regulating these areas. Our cxpcrionce in drafting regulations to implement the existing law has brought to the surface many problems the solutions to which must be tested in practice before we can confidently apply similar approaches in other areas. Some of the more perplexing questions which have not yet been finally resolved include the extent to which a creditor should be required to consider alimony as ordinary income, the extent to which a non-working spouse should benefit from the credit history of a joint account and the problem of how to provide the consumer with a "clear and meaningful" statement of the reasons for denial. In our effoi :.s to reconcile the statutory goal of equal credit opportunity with the need to preserve the lender's ability to di -t ‘ gcish arcura’.oly . - 3 - the creditworthiness of different applicants we have proposed solutions whose success w ill not be known until the effects of their actual operation can be measured. Sim ilarly, even a prelim inary look at the prohibition against age discrim ination, a m ajor feature of all three bills, d iscloses p a rti cularly complex questions. For example, under the proposed legislation, to what extent w ill it be perm issible to use statistical data in evaluating applicants fo r credit? Can statistical data relating to age be used in determining creditworthiness in the same way that insurance companies utilize actuarial tables to evaluate insurance risks or should the approach be sim ila r to that in the Equal Employment Opportunity A ct _*/ guidelines which direct that "individuals be considered on the basis of individual capacities, and not on the basis of any characteristics generally attributed to the group" **/ and thereby forbid the relian ce on data which reflect the perform ance of a particular group? Each of us at the Board is influenced by the realization of how much is at stake in these endeavors. Unless they are ca rried out in the best possible manner, we may not only fa il to gain the positive benefits fo r our citizens that are so earnestly sought, but we may also reduce the availability of credit and bring discredit upon these and other laudable efforts to dispel bias and prejudice by the reasoned and ord erly develop ment of our legal system. An attempt to impose these solutions without sufficient knowledge of their possible ram ifications could have the adverse effect of reducing the availability of credit by inflating c re d ito rs' costs £7 T itle VII of the 1964 C ivil Rights Act, as amended in 1972. * * / 29 C .F .R . 1604. 2 (Equal Employment Opportunity Com m ission's Guidelines). - 4 - and elim inating the sm aller lender whose profit m argin cannot sus tain such costs. Our best hope fo r achieving the worthy objectives of this proposed legislation w ill depend upon not only the understanding of the Congress of this fundamental problem but also on our efforts to study and understand the problem s as thoroughly as possible, to consult as extensively as we can, and then to draft the regulation as carefully and objectively as we know how. A ccordingly, we would suggest that Congress allow its e lf m ore tim e to continue its study of the problem s involved in extending the Equal C redit Opportunity Act to the proposed new categories in order to achieve a thorough analysis of the issues. W e also believe that before enlarging the scope of the Equal C redit Opportunity Act, Congress should obtain the benefit of the experience of consumers and creditors under the regulation pertaining to sex and m arital status which w ill be published in final form in the next few months. If, after review ing these considerations, the Com m ittee nevertheless decides to proceed with the proposed amendments at this time, the Hoard of Governors w ill make the utmost effort to ca rry out its rule-writing and enforcement responsibilities under the broadened Act in the fa irest and the most effective way possible. With that in mind, the Board wishes to emphasize the fact that the presently proposed 6 month ru lew riting period is not adequate given the com plexity of the issues and 1.!,e dearth of previous work in these areas of credit regulation. - 5 - In accordance with our best estim ates, we request that the effective date of the amendments be set at two years rather than six months after enactment. Our objective is a tim e fram e that w ill perm it the Board to discharge its responsibility in a manner that w ill fully ca rry out C ongress' intent and serve the public interest. Based upon our experience in writing regulations under the existing Act, and under the Truth in ¡.ending and F a ir C redit B illing A cts, the Board is aware that the final version of a regulation of this kind should be adopted at least six months before it becomes effective. The lead tim e is essential to achieve three basic goals: firs t, to give the Board tim e to inform creditors of their new duties and responsi bilities under the regulation; second, to give creditors time to rev ise their procedures, rew rite their form s, and train their people, and third, to allow the Board to educate consumers as to their rights under the amended A ct. For example, a minimum lead tim e of severa l months is needed sim ply to print the new application form s in the quantities required. Thus a period of two years only provides 18 months in actuality for the rulew riting process itself. We have constructed a tim etable, and attached it to this testimony, which explains in detail what must be done during the 18 months needed for the actual drafting and adoption of a regulation of the quality we believe Congress wants and the public interest requires. I would now like to comment upon specific provisions of the three b ills. With regard to S. 483, the only point 1 would like to ra is e concerns the use of the word "a rb itra ry " to modify the term "age lim it ." The Board has concurred with the position expressed by Congress in the - 6 - language of the current Law relating to sex and m arital status --that it would be unwise to place any qualifying language in the statement of the A ct's basic prohibition. The addition of the term "a rb itra ry , " while appearing to modify the class protected by the A ct, in fact, gives little, if any, guidance to the Board as to what is intended. M ore significant, it may be inconsistent with the extensive body of c iv il rights law which defines the word "d iscrim in a te" and establishes the lega l standards of scrutiny to be used in determining whether conduct is d is crim inatory.^/ If Congress wishes to qualify the coverage of the amendment in the area of age, it is recommended that such qualifications be spelled out with particularity. Let me turn now to a second b ill regarding Equal C redit Opportunity - - S. 1927. Section 701(a) of this b ill would establish three specific categories of prohibited discrim ination which are not included i n l l . R . 6516. These are the categories of political affiliation, receipt of public assistance benefits, and ex ercise of rights under the A ct or other provision of law. With regard to the inclusion of "p olitica l affiliation " as a category of prohibited discrim ination, we suggest that, since we are not aware of any evidence of such discrim ination, this would appear to be an area in which further inquiry on the Com m ittee's part may be advisable. In contrast evidence has been presented regarding discrim ination on the basis of an applicant's receipt of public assistance benefits. Surveys reported by the A:ational Com m ission on Consumer Finance suggest that \ ^7 See, e . g . G riggs v. Duke Power C o ., 401 U.S. 424, 429-30 (1971); A lb erm arle Paper Co. v. Aloodv, U.S. , Slip Opinion nI 10-ll(June 25, 1975). “ - the problem is significant. */ 7 - W e would agree that the receip t of public assistance, be it Aid to Dependent Children, disability o r Social Security benefits, should not by its e lf disqualify one fo r credit. In all cases the essential determinants of a person's qualifications fo r credit are the ability and willingness to repay. Since credit is often extended to co ver the most basic purchases, including shelter, clothing, and furniture, the credit granting process should o ffe r every applicant the opportunity to demonstrate his or her individual m erits. Section 701(a)(5) of the b ill would prohibit discrim ination on the basis of "e x e rc is e of rights under this act o r other provisions of law. " W e have no difficulty with the fir s t part of that category but the term "o r other provisions of law " would bring within the act's prohibition the ex ercise of the entire spectrum of other legal rights, some of which a cred itor might justifiably consider in determining creditworthiness. is the ex ercis e of rights under the bankruptcy law. The most obvious case We b elieve a discharge in bankruptcy to be a valid consideration in a determination of creditworthiness and one that should not be prohibited. We suggest that this category of prohibition be revised to includc only "e x e rc is e of rights under this A ct. " Sections 701(b) of S. 1927 and 701(d) of TI.R. 6516, provide, in effect, that the consideration of an applicant's age, when used fo r the purpose of applying c rite ria favoring applicants in a particular age category, shall not constitute discrim ination. some revision to cla rify their scope and intent. ^7 These provisions requ ire A ccording to the "Consum er C redit in the United States, "R ep ort of the National Com m ission on Consumer Finance, 155-160 (D ecem ber, 1972). - 8 - House Com m ittee report on II. R. 6516 and the comments accompanying the introduction of S. 1927, the provisions w ere intended to perm it the use of age information when carryin g out affirm ative action program s designed to benefit a particular age category. It would be preferable if these provisions described with sp ecificity which age categories are deemed to be in need of such protection, and then explicitly authorized the Board to implement these objectives by regulation. As the provision now reads, it creates a loophole by making it possible for a cred itor who discrim inated against one age category, to ra ise as a defense the argument that its policy was designed to favor another age category. Section 701(d) of S. 1927 would require creditors to furnish rejected applicants with a notice of the reasons for denial or te r m i nation of credit. A s the Com m ittee may be aware, the proposed regulation issued by the Board under the existing act contains a sim ila r provision which would require notice of reasons fo r denial only when requested by an applicant. this entire question. The Board is still considering Its present feeling is that requiring the notice to be given only where requested would accomplish the purposes of the requirement without putting the cred itor to the unnecessary expense of providing a written statement in all instances of denial. The Hoard believes that the existing law provides the necessary authority for a provision of this nature, however, if Congress desires to include the provision in the amendments to the A ct, the Board would welcome this explicit statement of its 3 would suggest that Congress consider the modified ve rsi n the proposed regulation. LIBRARY - 9 - I would now like to address the two leg is la tive proposals, S. 1900 and S. 1961, dealing with consumer leasing which the Subcommittee is considering. The Board is particularly pleased to see legisla tive action beginning in this area, since the need fo r consumer leasing disclosures has been of some concern to us o v er the last two years. In its Annual Report to Congress on Truth in Lending for 1973, the Board pointed out severa l disclosure problem s in the area of consumer leasing and suggested that the C ongress might wish to examine this rapidly expanding field. The additional step of recommending legisla tive provisions was taken by the Board in its Truth in Lending Report for 1974, and 1 was gratified to note that many of the provisions of the Board's proposal have been incorporated into the two bills. I would like to state at the outset that the Board believes that consumer leasing is an appropriate method of utilizing and, in some cases, of purchasing consumer durables. Consumer leasing has experienced rapid growth within the last decade. This growing popularity suggests that the public is increasingly coming to view leasing as a viable alternative to credit purchases fo r some products. - 10 - A vailab le statistics on the growth of consumer leasing indicate that the so-called "b ig-tick et du rab les," such as automobiles, co lor television sets, and home furnishings are the most common goods leased by consumers. Autom obiles presently constitute the most popular leased goods, and this aspect of consumer leasing w ill no doubt absorb much of the Subcommittee's attention during its d elib erations on this legislation. Automobile leasing has experienced rapid growth over the past decade. According to statistics from the National Automobile D ealers Association, in 1965, m ore than 1. 5 m illion, some 14 per cent of the total number of automobiles produced, w ere leased, and one-fifth of this total was leased to individuals. By 1970, the percentage of automobile production that was leased had grown to 24 per cent (2.6 m illion), m ore than a quarter of which represented leases to individuals. A s of 1974, 2. 8 m illion, about 26 per cent of the total number of cars made, w ere leased, and 36 per cent of this total was leased to individuals. Thus, over alm ost a decade, the percentage of total automobile production leased to individuals has tripled in size: from less than 3 per cent in 1965 to 9. 2 per cent in 1974. Projections from auto m akers in D etroit, m oreover, estim ate that 80 per cent of the growth in leasing through 1980 w ill be seen in leases to individuals. -1 1 - The Board's concern with consumer leasing is that p r e sently, except fo r provisions made in a few State statutes, there is no requirement that a standardized aggregate cost disclosure be given the consumer when he leases goods under a long-term contract. Truth in Lending's m ajor purpose has been to facilitate meaningful consumer shopping of the credit market by providing standardized disclosures of credit costs. Without comparable disclosures on consumer leasing, it is difficult, if not im possible, fo r consumers to shop in the expanding leasing m arket. Our hope is that the passage of this type of legislation w ill help consumers not only to compare leasing alternatives, but also to compare lease transac tions with conventional credit sales. The need fo r comparability in disclosure between lease and credit transactions is particularly important, because many con sumer leasing arrangements now prevalent in the m arket are essentially the equivalent of credit sales. The term inology of the trade, fo r example, re fe rs to certain lease agreements as "financing le a s e s ." The fact that many of these leases are essentially equivalent to credit sales is not coincidental. F o r example, both the C om ptroller of the Currency as to national banks and the Board in its rules governing bank holding company activities require that leases entered into by these institutions be the functional equivalent of a credit transaction and have thus lim ited the asset risk that banks and bank-related lessors may take in engaging in leasing operations. These rules, designed to protect the safety and soundness of banks in which the public deposi+s its funds, have the effect of placing the risk of any unforeseen deterioration o r depreciation of the product leased on the lessee. Thus, legislation to protect the consumer by requiring proper disclosure of the consumer les s e e 's risks becomes a ll the m ore important. Otherwise, the lessee may unknowingly undertake nearly all the burdens of ownership, without the benefit of title o r adequate cost disclosures. Tt is presently not possible as a practical m atter to requ ire adequate cost disclosures on leases under the Truth in Lending Act. The Truth in Lending Act brings certain leases within its disclosure requirem ents, through the definition of credit sale contained in § 103(g). H ow ever, these requirements apply only with respect to those leases which contain provisions permitting the lessee to become the owner of the goods leased "fo r no other or a nominal consideration. " The Board might conceivably expand this provision by adopting a broad definition of what constitutes nominal consideration. Flowever, this would still not accomplish the purpose of assuring that adequate cost disclosures are given in all consumer leases, such as those in which there is no option to purchase. In addition, we b elieve that the number of leases with nominal purchase options is quite sm all. - 13 - The focal point of the Board's concern is thus those long term leases of personal property to be used fo r personal, fa m ily or household purposes, which typically have a m aturity approaching that of a credit sale agreement, and potentially bind the lessee to the payment of an aggregate sum substantially equivalent to the value of the goods leased. This does not include the sh ort-term convenience leasing such as ren t-a -ca r arrangements. We fe el that standardized disclosures, comparable to those set forth under Truth in Lending, should be required fo r lease advertisements as w ell as fo r consumer lease transactions. However, we do not believe that rate disclosures, analogous to the annual percentage rate under Truth in Lending, are practical. The develop ment. of lease rate disclosures is im practical, we fe e l, because of the difficulty of determining what common costs should be isolated in the computation of such rates. I would now like to comment on two sections of S. 1961 and one section of S. 1900 that we regard as highly important. The firs t is § 183, a sectional referen ce common to both bills, which sets a ■ lim itation on a consumer lessee's liability. This section of the two bills addresses the liability that the lease may impose on a consumer lessee at the end of the lease term . It is not uncommon for consumer leases to provide that upon the expiration of the lease, the product w ill have a stipulated depreciated value and w ill either be purchased by the lessee or sold to an independent party. Under the term s of such an agreem ent, if the product is sold and brings less than the depreciated value stipulated in the contract, the les se e is liable fo r the difference; if it brings m ore, the lessee is entitled to the surplus. F o r example, a typical tw o-year auto lease on a $5, 400 car might call fo r 24 $100 instalment payments and set an end-term depreciated value of $3, 000 on the car. Under such an agreem ent, the lessee may have no understanding of how much the lease may cost, unless he can accurately predict the second-hand market value of the product. F'or example, in this case, the depreciated value of the ca r might be $2, 500, which under the lease contract would leave the lessee liable fo r an additional $500 balloon payment. Thus, if the contract sets an unrealistic ally high depreciated value on the leased goods, the contingent liab ility of the les se e w ill increase accordingly, and the lessor can o ffer deceptively low monthly rental payments to an unwary public. Section 183 of S. 1961 sets the le s s e e 's contingent lia b ility as the le s s e r of twice the average monthly rental payment or 10 per cent of the total rental payments under the lease. The comparable provision in S. 1900 states that the le s s e e 's contingent liability would be lim ited to three tim es the monthly rental payment o r a la rg e r amount agreed upon by the lessor and lessee. Both b ills provide an exception lo <he lim it placod on lessee lia b ility in the case of damage beyond normal wear and tear to the leased product o r in the case of lessee delinquency. - 15 - The provisions of both b ills are designed to assure that the lessee is notified in advance of the extent of his maximum contract lia b ility under the lease. By incorporating a monthly payment factor or a percentage of total payments into the computation of this maximum end-term figure, both bills seek to assure that the les so r w ill p rice the rental instalments of the leased goods sufficiently high to co ver expected depreciation and thus avoid leaving the consumer les se e with an unduly la rg e balloon payment at the end of the lease term . The Board supports the purpose of both of these protective features. How ever, as the Board stated in its 1974 Annual Report, it is not committed to any specific lia b ility form ula. The th ree- month form ula of S. 1900 or the 10 per cent alternative in S. 1961 may both be quite adequate. The Board would hope, however, that whatever form ula m ay be chosen w ill re fle c t industry experience in accurately setting depreciated values. Some, but not all, members of the Board have concern over the provision in S. 1900, which allows fo r the substitution of a la rg e r amount agreed to by the lessee and le s s o r. T h eir concern is with the lik ely disparity in bargaining power between lessee and les so r and with the possibility that such a la rg e r amount might be offered in a pre-printed form contract on a "tak e-it or le a v e - it" basis. They b elieve, m oreover, that some lim itation tied to instalment payments is highly desirable, because of its ability to assure that the leased product w ill be fa irly priced to cover anticipated depreciation. - L3 < The second provision on which [ would like to comment is § 6 of S. 1961. This section places an effective date fo r this legislation as the fir s t day of the second full calendar month after the date of enactment. As we have mentioned before, we b elieve the tim e that the Congress grants to an agency to implement a given statute has a direct bearing on the quality and effectiveness of the agency's regu lations. We believe the two-month period accorded under S. 1961 is far too short vo develop w ell-considered implementing regulations, which a re fa ir to the lessee and le s s o r alike. T im e fo r consultation with both business and consumer groups is needed. Tim e is also needed to comply with the Adm inistrative Procedure A ct which requires publication of proposed rules fo r comment. Responding comments must be carefully analyzed, and an effort must be made to educate consumers on the legislation. Finally, if the regulations are to be properly complied with, industry must have some tim e to study them and to change business procedures. T h erefore, the Board would r e spectfully urge that a minimum of 12 months be provided, as § 5 of S. 1900 would provide, before this Act is to become effective. In closing I would like to commend this Com m ittee fo r the action taken in the area of consumer leasing. This new and expand ing alternative to credit purchases, we feel, m erits careful attention, and we are hopeful that the Congress w ill provide a statutory basis to assure that the consuming public w ill have the necessary information to make intelligent shopping decisions in Lease transactions. With re ta rd to the Equal C redit amendments, the Board supports the purpose .-3 o f i.he legislation but believes that further inquiry and analysis are needed to devise the most suitable rr, ihods of serving - these purposes. 17 - We believe the prudent course would be to draw upon the experience which w ill be gained after the existing law covering sex and m arital status has been in effect for a reasonable tim e, and to defer extensions of the coverage of the Act until such experience is available. questions. I w ill be pleased to respond to any of your F ed era l R e s e rv e memorandum on estim ated working schedule fo r developing a regulation under II. R. 6516 (Amendments to the Equal C red it Opportunity A c t) In o rd er to m eet the standards of public inform ation established by the Congress in the A dm in istrative Proced u re A ct, to afford an adequate opportunity fo r identification and exploration of problem areas, and to fa cilitate public participation in the rulew riting p rocess, the follow ing procedures are necessary. Estim ated tim es a re given fo r each. Contact with affected persons and groups and identification of problem s: 5 to 6 months. Contact must be made with consum er groups and with representatives of cred itor in terests, in o rd er that these groups can m eet with the staff to educate it as to the problem s that a re lik e ly to a rise in implementing the A ct. W hile much work of this kind has already been done under the present provisions relatin g to sex and m arital status, the new ca tegories w ill affect consumer groups that have not yet been heard from and w ill undoubtedly ra is e problem s on the cred itor side that have not yet served as the focus of their attention. In o rd er to comment and to educate the Board’ s staff in a useful way, it is necessary fo r those who a re affected to have some tim e in which to study the legislation and consult with their associates. It has been our experience that fiv e to six months should be afforded fo r this kind of study and consultation, and fo r the m eetings with - 2 - staff that follow . W hile inform al consultation of this kind of course continues throughout the ru lew riting p rocess, it has been the B oard's experience that this initial period provides an essential foundation fo r building a sound regulation. Constructing the draft regulation: 5 months. A s the in itial period draws to a close, staff is in a position to begin actual work of drafting. Th is work involves the m ost careful analysis of every word and phrase that is to go into the regulation. T h e re w ill also be a need fo r extensive consultation with staffs o f the R e se rv e Banks and of other agencies having enforcem ent respon sibility under the A ct. The proposed regulation under the Equal C red it Opportunity A ct which the Board released fo r public comment on A p r il 23, fo r example, went through eight complete prelim in ary drafts b e fo re it was ready to be considered by the Board of G overnors. That regulation was drafted under a v e ry intensive tim e constraint, because o f the deadline im posed by the A ct. The new amendments would ra is e questions in a number of vital areas such as age where there has not been the in itial background provided by the hearings on the b ills leading up to the present A ct, and it is estim ated that about three and a half months would be required fo r com pletion o f a staff draft and a further month and a half fo r study and revision by the Board its e lf. Public comment after publication in the F e d e ra l R e g is te r: 4 months. A t this point, the draft would be ready to be published fo r public comment. It has been the B oard's experience that the actual - 3 - language of a proposed regulation invariably gives r is e to unforseen but important comments and objections from all sides. A t least a hundred and twenty days m ore should be afforded in o rd er to give adequate opportunity fo r affected consumer and cred itor groups to study this language and r e a liz e its im port, as w ell as fo r the agencies having enforcem ent respon sibilities under the statute to react to changes made from prelim in ary drafts in response to their, and other, comments. Public hearings and filin g of supplementary view s: The Board has scheduled public hearings 11/2 months. to be held on its proposed regulation relatin g to sex and m arital status, so that there can be full public participation in the ru lew riting process. A public hearing would appear even m ore essential under the proposed amend ments. Another six weeks should be provided, th erefore, to allow fo r rev iew of the transcript and fo r the filin g of supplementary views and comments. Final revision s: 3 months. The work by the Board and its staff of revisin g the proposed rule in the light of written comments rec eive d , o ra l presentations made at a hearing, and supplementary views cannot be accomplished sa tisfa ctorily in less than a further ninety days. V e ry sig n i ficant revisions may have to be made at this stage and it may be necessary to go back and consult further with consumers and creditors and suitable implementation of suggestions they have made. as to the meaning It is not until these final adjustments have been made is a final rule ready to be promulgated. - 4 - It thus appears that the best estim ate of a working schedule to com plete and publish a regulation im plementing H .R . 6516 w ill total at lea st eighteen months. It is only after promulgation of a final rule that consumers and cred itors alike re c e iv e definite word as to what the new regulation w ill provide. A s stated in the coverin g le tte r, six months w ill p ro vide only a minimum of tim e fo r the public to becom e inform ed about a m atter as critica l as these rules would be to the w elfa re of ve ry many consumers, and fo r cred itors to prepare to comply with such rules. It should be emphasized that the estim ates given above a re minimums and are based upon actual experience fo r each phase o f the ru lew ritin g process. The above schedule allows v e ry little tim e fo r economic studies to illum inate questions such as the validity of sta tistica llybased conclusions as to the relationship between age and c re d it worthiness (som e creditors it is understood, have found this particular relationship to be a ffirm a tive at all points along the scale fo r persons in their middle fiftie s and beyond). In o rd e r to be taken into consideration in the rulew riting process, such studies would probably have to be completed within the fir s t six o r eight months. N o r do they allow time fo r contingencies that might a ris e requiring republication of a revised rule fo r comment. N everth eless, with an two y ea r lead tim e, the Board could fe e l m o re confident o f doing a job that would ju stify the confidence the C ongress has shown in it. - 5 - In order to allow oi;.jiiteen months fo r the rulew riting process, plus a six-month adjustment period after the regulation is adopted in final form , section 708 of the Equal Opportunity A ct, as redesignated by section 5 of H .li. 6516, should be amended by insertin g except that the amendments made by the Equal C red it Opportunity Act Amendments of 1975 shall take effect two years a fter the date of its enactment" im m ediately b efo re the period at the end thereof.