81_FR_51550 81 FR 51400 - Consumer Leasing (Regulation M)

81 FR 51400 - Consumer Leasing (Regulation M)

FEDERAL RESERVE SYSTEM
BUREAU OF CONSUMER FINANCIAL PROTECTION

Federal Register Volume 81, Issue 150 (August 4, 2016)

Page Range51400-51404
FR Document2016-18059

The Board and the Bureau are proposing to amend the official interpretations and commentary for the agencies' regulations that implement the Consumer Leasing Act (CLA). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the CLA by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust this exemption threshold from the prior year. The proposal would memorialize this as well as the agencies' calculation method for determining the adjustment in years following a year in which there is no annual percentage increase in the CPI-W. Because the Dodd-Frank Act also requires similar adjustments in the Truth in Lending Act's threshold for exempt consumer credit transactions, the Board and the Bureau are proposing similar amendments to the commentaries to each of their respective regulations implementing the Truth in Lending Act elsewhere in the Federal Register.

Federal Register, Volume 81 Issue 150 (Thursday, August 4, 2016) 
[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)]
[Proposed Rules]
[Pages 51400-51404]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-18059]


-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM

12 CFR Part 213

[Docket No. R-1545]
RIN 7100 AE-56

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1013

[Docket No. CFPB-2016-0036]


Consumer Leasing (Regulation M)

AGENCY: Board of Governors of the Federal Reserve System (Board); and 
Bureau of Consumer Financial Protection (Bureau).

ACTION: Proposed rule; official interpretations.

-----------------------------------------------------------------------

SUMMARY: The Board and the Bureau are proposing to amend the official 
interpretations and commentary for the agencies' regulations that 
implement the Consumer Leasing Act (CLA). The Dodd-Frank Wall Street 
Reform and Consumer Protection Act (Dodd-Frank Act) amended the CLA by 
requiring that the dollar threshold for exempt consumer credit 
transactions be adjusted annually by the annual percentage increase in 
the Consumer Price Index for Urban Wage Earners and Clerical Workers 
(CPI-W). If there is no annual percentage increase in the CPI-W, the 
Board and Bureau will not adjust this exemption threshold from the 
prior year. The proposal would memorialize this as well as the 
agencies' calculation method for determining the adjustment in years 
following a year in which there is no annual percentage increase in the 
CPI-W.
    Because the Dodd-Frank Act also requires similar adjustments in the 
Truth in Lending Act's threshold for exempt consumer credit 
transactions, the Board and the Bureau are proposing similar amendments 
to the commentaries to each of their respective regulations 
implementing the Truth in Lending Act elsewhere in the Federal 
Register.

DATES: Comments must be received on or before September 6, 2016.

ADDRESSES: Interested parties are encouraged to submit written comments 
jointly to the Board and the Bureau. Commenters are encouraged to use 
the title ``Consumer Leasing (Regulation M)'' to facilitate the 
organization and distribution of comments among the agencies. 
Interested parties are invited to submit written comments to:
    Board: You may submit comments, identified by Docket No. R-1545 or 
RIN 7100 AE-56, by any of the following methods:
     Agency Web site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include the 
docket number in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Robert deV. Frierson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue NW., 
Washington, DC 20551.
    All public comments will be made available on the Board's Web site 
at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons. Accordingly, comments 
will not be edited to remove any identifying or contact information. 
Public comments may also be viewed electronically or in paper in Room 
MP-500 of the Board's Martin Building (20th and C Streets NW.,) between 
9:00 a.m. and 5:00 p.m. on weekdays.
    Bureau: You may submit comments, identified by Docket No. CFPB-
2016-0036 by any of the following methods:
     Email: [email protected]. Include Docket 
No. CFPB-2016-0036 in the subject line of the email.
     Electronic: http://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 
20552.
     Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1275 First 
Street NE., Washington, DC 20002.
    Instructions: All submissions should include the agency name and 
docket number or Regulatory Information Number (RIN) for this 
rulemaking. Because paper mail in the Washington, DC area and at the 
Bureau is subject to delay, commenters are encouraged to submit 
comments electronically. In general, all comments received will be 
posted without change to http://www.regulations.gov. In addition, 
comments will be available for public inspection and copying at 1275 
First Street NE., Washington, DC 20002, on official business days 
between the hours of 10 a.m. and 5 p.m. eastern time. You can make an 
appointment to inspect the documents by telephoning (202) 435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or Social 
Security numbers, should not be included. Comments will not be edited 
to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Board: Vivian W. Wong, Senior Counsel, 
Division of Consumer and Community Affairs, Board of Governors of the 
Federal Reserve System, at (202) 452-3667; for users of 
Telecommunications Device for the Deaf (TDD) only, contact (202) 263-
4869.
    Bureau: Shaakira Gold-Ramirez, Paralegal Specialist, Jaclyn Maier, 
Counsel, Office of Regulations, Consumer Financial Protection Bureau, 
at (202) 435-7700.

SUPPLEMENTARY INFORMATION:

[[Page 51401]]

I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 
2010 (Dodd-Frank Act) increased the threshold in the Consumer Leasing 
Act (CLA) for exempt consumer leases from $25,000 to $50,000, effective 
July 21, 2011.\1\ In addition, the Dodd-Frank Act requires that, on and 
after December 31, 2011, this threshold be adjusted annually for 
inflation by the annual percentage increase in the Consumer Price Index 
for Urban Wage Earners and Clerical Workers (CPI-W), as published by 
the Bureau of Labor Statistics. In April 2011, the Board issued a final 
rule amending Regulation M (which implements the CLA) consistent with 
these provisions of the Dodd-Frank Act along with a similar final rule 
amending Regulation Z (which implements the Truth in Lending Act) 
(collectively, the Board Final Threshold Rules).\2\
---------------------------------------------------------------------------

    \1\ Public Law 111-203, section 1100E, 124 Stat. 1376 (2010).
    \2\ 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. 4, 2011).
---------------------------------------------------------------------------

    Title X of the Dodd-Frank Act transferred rulemaking authority for 
a number of consumer financial protection laws from the Board to the 
Bureau, effective July 21, 2011. In connection with this transfer of 
rulemaking authority, the Bureau issued its own Regulation M 
implementing the CLA in an interim final rule, 12 CFR part 1013 (Bureau 
Interim Final Rule).\3\ The Bureau Interim Final Rule substantially 
duplicated the Board's Regulation M, including the revisions to the 
threshold for exempt transactions made by the Board in April 2011. In 
April 2016, the Bureau adopted the Bureau Interim Final Rule as final, 
subject to intervening final rules published by the Bureau.\4\ Although 
the Bureau has the authority to issue rules to implement the CLA for 
most entities, the Board retains authority to issue rules under the CLA 
for certain motor vehicle dealers covered by section 1029(a) of the 
Dodd-Frank Act, and the Board's Regulation M continues to apply to 
those entities.\5\
---------------------------------------------------------------------------

    \3\ 76 FR 78500 (Dec. 19, 2011).
    \4\ 81 FR 25323 (April 28, 2016).
    \5\ Section 1029(a) of the Dodd-Frank Act states: ``Except as 
permitted in subsection (b), the Bureau may not exercise any 
rulemaking, supervisory, enforcement, or any other authority * * * 
over a motor vehicle dealer that is predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both.'' 12 U.S.C. 5519(a). Section 1029(b) of the 
Dodd-Frank Act states: ``Subsection (a) shall not apply to any 
person, to the extent that such person (1) provides consumers with 
any services related to residential or commercial mortgages or self-
financing transactions involving real property; (2) operates a line 
of business (A) that involves the extension of retail credit or 
retail leases involving motor vehicles; and (B) in which (i) the 
extension of retail credit or retail leases are provided directly to 
consumers; and (ii) the contract governing such extension of retail 
credit or retail leases is not routinely assigned to an unaffiliated 
third party finance or leasing source; or (3) offers or provides a 
consumer financial product or service not involving or related to 
the sale, financing, leasing, rental, repair, refurbishment, 
maintenance, or other servicing of motor vehicles, motor vehicle 
parts, or any related or ancillary product or service.'' 12 U.S.C. 
5519(b).
---------------------------------------------------------------------------

    Section 213.2(e)(1) of the Board's Regulation M and Sec.  
1013.2(e)(1) of the Bureau's Regulation M, and their accompanying 
commentaries, provide that the exemption threshold will be adjusted 
annually effective January 1 of each year based on any annual 
percentage increase in the CPI-W that was in effect on the preceding 
June 1. Any increase in the threshold amount will be rounded to the 
nearest $100 increment. For example, if the annual percentage increase 
in the CPI-W would result in a $950 increase in the threshold amount, 
the threshold amount will be increased by $1,000. However, if the 
annual percentage increase in the CPI-W would result in a $949 increase 
in the threshold amount, the threshold amount will be increased by 
$900.\6\ If there is no annual percentage increase in the CPI-W, the 
Board and Bureau will not adjust the exemption threshold from the prior 
year.
---------------------------------------------------------------------------

    \6\ See comments 2(e)-9 in Supplements I of 12 CFR part 213 and 
12 CFR part 1013.
---------------------------------------------------------------------------

    Since 2011, the Board and the Bureau have adjusted the Regulation M 
exemption threshold annually, consistent with these rules. The Board 
and the Bureau last published final rules implementing the exemption 
threshold in effect for January 1, 2016, through December 31, 2016, in 
November 2015.\7\
---------------------------------------------------------------------------

    \7\ 80 FR 73945 (Nov. 27, 2015).
---------------------------------------------------------------------------

II. Commentary Revision

    The Board and the Bureau are proposing new commentary to 
memorialize the calculation method used by the agencies each year to 
adjust the exemption threshold. Comment 2(e)-9 to the Board's and 
Bureau's Regulation M currently provides the threshold amount in effect 
during a particular period and details the rules the agencies use for 
rounding the threshold calculation to the nearest $100 or $1,000 
increment, as discussed above in part I, ``Background.''
    The Board and the Bureau are proposing to revise comment 2(e)-9 by 
moving the text regarding the threshold amount that is in effect during 
a particular period to a new proposed comment 2(e)-11. The discussion 
of how the agencies round the threshold calculation would remain in 
comment 2(e)-9.
    As stated in the Board Final Threshold Rules, if there is no annual 
percentage increase in the CPI-W, the Board and Bureau will not adjust 
the exemption threshold from the prior year.\8\ This position is 
consistent with Section 1100E(b) of the Dodd-Frank Act, which states 
that the threshold must be adjusted by the ``annual percentage 
increase'' in the CPI-W (emphasis added). The Board and the Bureau are 
proposing to memorialize this concept in proposed comment 2(e)-10, 
which would provide that if the CPI-W in effect on June 1 does not 
increase from the CPI-W in effect on June 1 of the previous year, the 
threshold amount effective the following January 1 through December 31 
will not change from the previous year. For example, if the threshold 
in effect from January 1, 2019, through December 31, 2019, is $55,500 
and the CPI-W in effect on June 1 of 2019, indicates a 1.1 percent 
decrease from the CPI-W in effect on June 1, 2018, the threshold in 
effect for January 1, 2020, through December 31, 2020, will remain 
$55,500.
---------------------------------------------------------------------------

    \8\ 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (``[A]n annual period 
of deflation or no inflation would not require a change in the 
threshold amount.'').
---------------------------------------------------------------------------

    Proposed comment 2(e)-10 would further set forth the calculation 
method the agencies would use in years following a year in which the 
exemption threshold was not adjusted because there was no increase in 
the CPI-W from the previous year. The proposed calculation method would 
ensure that the values for the exemption threshold keep pace with the 
CPI-W as contemplated by Section 1100E(b) of the Dodd-Frank Act.
    Specifically, as set forth under proposed comment 2(e)-10, for the 
years after a year in which the threshold did not change because the 
CPI-W in effect on June 1 decreased from the CPI-W in effect on June 1 
of the previous year, the threshold is calculated by applying the 
annual percentage change in the CPI-W to the dollar amount that would 
have resulted if the decreases and any subsequent increases in the CPI-
W had been taken into account. Proposed comment 2(e)-10.i further 
states that, if the resulting amount is greater than the current 
threshold, then the threshold effective January 1 the following year 
will increase accordingly.
    For example, assume that the threshold in effect from January 1, 
2019, through December 31, 2019, is $55,500 and that, due to a 1.1 
percent decrease from the CPI-W in effect on June 1,

[[Page 51402]]

2018, to the CPI-W in effect on June 1, 2019, the threshold in effect 
from January 1, 2020, through December 31, 2020, remains at $55,500. 
If, however, the threshold had been adjusted downward to reflect the 
decrease in the CPI-W over that time period, the threshold in effect 
from January 1, 2020, through December 31, 2020, would have been 
$54,900. Further assume that the CPI-W in effect on June 1, 2020, 
increased by 1.6 percent from the CPI-W in effect on June 1, 2019. The 
calculation for the threshold that will be in effect from January 1, 
2021, through December 31, 2021, is based on the impact of a 1.6 
percent increase in the CPI-W on $54,900, rather than $55,500, 
resulting in a 2021 threshold of $55,800.
    Furthermore, comment 2(e)-10.ii states that, if the resulting 
amount calculated is equal to or less than the current threshold, then 
the threshold effective January 1 the following year will not change, 
but future increases will be calculated based on the amount that would 
have resulted. To illustrate, assume in the example above that the CPI-
W in effect on June 1, 2020, increased by only 0.6 percent from the 
CPI-W in effect on June 1, 2019. The calculation for the threshold that 
will be in effect from January 1, 2021, through December 31, 2021, is 
based on the impact of a 0.6 percent increase in the CPI-W on $54,900. 
The resulting amount is $55,200, which is lower than $55,500, the 
threshold in effect from January 1, 2020, through December 31, 2020. 
Therefore, the threshold in effect from January 1, 2021, through 
December 31, 2021, will remain $55,500. However, the calculation for 
the threshold that will be in effect from January 1, 2022, through 
December 31, 2022, will apply the percentage change in the CPI-W to 
$55,200, the amount that would have resulted based on the 0.6 percent 
change from the CPI-W in effect on June 1, 2019, to the CPI-W in effect 
on June 1, 2020.
    The agencies request comment on all aspects of the proposed rule.

III. Regulatory Analysis

Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis

    In developing this proposal, the Bureau has considered potential 
benefits, costs, and impacts.\9\ In addition, the Bureau has consulted, 
or offered to consult with, the prudential regulators, the Securities 
and Exchange Commission, the Department of Housing and Urban 
Development, the Federal Housing Finance Agency, the Federal Trade 
Commission, and the Department of the Treasury, including regarding 
consistency with any prudential, market, or systemic objectives 
administered by such agencies.
---------------------------------------------------------------------------

    \9\ Specifically, section 1022(b)(2)(A) calls for the Bureau to 
consider the potential benefits and costs of a regulation to 
consumers and covered persons, including the potential reduction of 
access by consumers to consumer financial products or services; the 
impact on depository institutions and credit unions with $10 billion 
or less in total assets as described in section 1026 of the Act; and 
the impact on consumers in rural areas.
---------------------------------------------------------------------------

    The Bureau has chosen to evaluate the benefits, costs and impacts 
of the proposed commentary against the current state of the world, 
which takes into account the current regulatory regime. The Bureau is 
not aware of any significant benefits or costs to consumers or covered 
persons associated with the proposal relative to the baseline. The 
Board previously stated that if there is no annual percentage increase 
in the CPI-W, then the Board (and now the Bureau) will not adjust the 
exemption threshold from the prior year.\10\ The proposal memorializes 
this in official commentary. The proposal also clarifies how the 
threshold would be calculated for years after a year in which the 
threshold did not change. The Bureau believes that this clarification 
memorializes the method that the Bureau would be expected to use: This 
method holds the threshold fixed until a notional threshold calculated 
using the Bureau's methodology, but taking into account both decreases 
and increases in the CPI-W, exceeds the actual threshold. The Bureau 
requests comment on this point. Thus, the Bureau believes that the 
proposed rule does not change the regulatory regime relative to the 
baseline and creates no significant benefits, costs, or impacts.
---------------------------------------------------------------------------

    \10\ 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (``[A]n annual period 
of deflation or no inflation would not require a change in the 
threshold amount.'').
---------------------------------------------------------------------------

    The proposed rule will have no unique impact on depository 
institutions or credit unions with $10 billion or less in assets as 
described in section 1026(a) of the Dodd-Frank Act or on rural 
consumers. The Bureau does not expect this final rule to affect 
consumers' access to credit.

Regulatory Flexibility Act

    Board: The Regulatory Flexibility Act (RFA) requires an agency to 
publish an initial regulatory flexibility analysis with a proposed rule 
or certify that the proposed rule will not have a significant economic 
impact on a substantial number of small entities.\11\ Based on its 
analysis, and for the reasons stated below, the Board believes that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Nevertheless, the Board is publishing an 
initial regulatory flexibility analysis and requests public comment on 
all aspects of its analysis. The Board will, if necessary, conduct a 
final regulatory flexibility analysis after considering the comments 
received during the public comment period.
---------------------------------------------------------------------------

    \11\ See 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    1. Statement of the need for, and objectives of, the proposed rule. 
The proposed rule would memorialize the calculation method used by the 
Board each year to adjust the exemption threshold in accordance with 
Section 1100E of the Dodd-Frank Act.
    2. Small entities affected by the proposed rule. Motor vehicle 
dealers that are subject to the Board's Regulation M and offer consumer 
leases that may be exempt from Regulation M under 12 CFR 213.2(e) would 
be affected. While the total number of small entities likely to be 
affected by the proposed rule is unknown, the Board does not believe 
the proposed rule will have a significant economic impact on the 
entities that it affects. The Board invites comment on the effect of 
the proposed rule on small entities.
    3. Recordkeeping, reporting, and compliance requirements. The 
proposed rule would not impose any recordkeeping, reporting, or 
compliance requirements.
    4. Other Federal rules. The Board has not identified any likely 
duplication, overlap and/or potential conflict between the proposed 
rule and any Federal rule.
    5. Significant alternatives to the proposed revisions. The Board 
solicits comment on any significant alternatives that would reduce the 
regulatory burden associated on small entities with this proposed rule.
    Bureau: The RFA generally requires an agency to conduct an initial 
regulatory flexibility analysis (IRFA) and a final regulatory 
flexibility analysis (FRFA) of any rule subject to notice-and-comment 
rulemaking requirements.\12\ These analyses must ``describe the impact 
of the proposed rule on small entities''.\13\ An IRFA or

[[Page 51403]]

FRFA is not required if the agency certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities.\14\ The Bureau also is subject to certain additional 
procedures under the RFA involving the convening of a panel to consult 
with small business representatives prior to proposing a rule for which 
an IRFA is required.\15\
---------------------------------------------------------------------------

    \12\ 5 U.S.C. 601 et seq.
    \13\ Id. at 603(a). For purposes of assessing the impacts of the 
proposed rule on small entities, ``small entities'' is defined in 
the RFA to include small businesses, small not-for-profit 
organizations, and small government jurisdictions. Id. at 601(6). A 
``small business'' is determined by application of Small Business 
Administration regulations and reference to the North American 
Industry Classification System (NAICS) classifications and size 
standards. Id. at 601(3). A ``small organization'' is any ``not-for-
profit enterprise which is independently owned and operated and is 
not dominant in its field.'' Id. at 601(4). A ``small governmental 
jurisdiction'' is the government of a city, county, town, township, 
village, school district, or special district with a population of 
less than 50,000. Id. at 601(5).
    \14\ Id. at 605(b).
    \15\ Id. at 609.
---------------------------------------------------------------------------

    An IRFA is not required for this proposal because if adopted it 
would not have a significant economic impact on a substantial number of 
small entities. As discussed in the Bureau's Section 1022(b)(2) 
Analysis above, this proposal does not introduce costs or benefits to 
covered persons because the proposal seeks only to clarify the method 
of threshold adjustment which has already been established in previous 
Agency rules. Therefore this proposed rule would not have a significant 
impact on small entities.
Certification
    Accordingly, the Bureau Director, by signing below, certifies that 
this proposal, if adopted, would not have a significant economic impact 
on a substantial number of small entities.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\16\ the 
agencies reviewed this proposed rule. No collections of information 
pursuant to the Paperwork Reduction Act are contained in the proposed 
rule.
---------------------------------------------------------------------------

    \16\ 44 U.S.C. 3506; 5 CFR 1320.
---------------------------------------------------------------------------

List of Subjects

12 CFR Part 213

    Advertising, Consumer leasing, Consumer protection, Federal Reserve 
System, Reporting and recordkeeping requirements.

12 CFR Part 1013

    Advertising, Consumer leasing, Reporting and recordkeeping 
requirements, Truth in Lending.

Board of Governors of the Federal Reserve System

Text of Proposed Revisions

    For the reasons set forth in the preamble, the Board proposes to 
amend Regulation M, 12 CFR part 213, as set forth below:

PART 213--CONSUMER LEASING (REGULATION M)

0
1. The authority citation for part 213 continues to read as follows:

    Authority:  15 U.S.C. 1604 and 1667f; Pub. L. 111-203 Sec.  
1100E, 124 Stat. 1376.

0
2. In Supplement I to Part 213, under Section 213.2--Definitions, under 
2(e) Consumer Lease, paragraph 9. is revised, and paragraphs 10. and 
11. are added, to read as follows:

Supplement I to Part 213--Official Staff Interpretations

* * * * *


Sec.  213.2  Definitions.

* * * * *

2(e) Consumer Lease

* * * * *
    9. Threshold amount. A consumer lease is exempt from the 
requirements of this Part if the total contractual obligation exceeds 
the threshold amount in effect at the time of consummation. The 
threshold amount in effect during a particular time period is the 
amount stated in comment 2(e)-11 for that period. The threshold amount 
is adjusted effective January 1 of each year by any annual percentage 
increase in the Consumer Price Index for Urban Wage Earners and 
Clerical Workers (CPI-W) that was in effect on the preceding June 1. 
Comment 2(e)-11 will be amended to provide the threshold amount for the 
upcoming year after the annual percentage change in the CPI-W that was 
in effect on June 1 becomes available. Any increase in the threshold 
amount will be rounded to the nearest $100 increment. For example, if 
the annual percentage increase in the CPI-W would result in a $950 
increase in the threshold amount, the threshold amount will be 
increased by $1,000. However, if the annual percentage increase in the 
CPI-W would result in a $949 increase in the threshold amount, the 
threshold amount will be increased by $900. If a consumer lease is 
exempt from the requirements of this Part because the total contractual 
obligation exceeds the threshold amount in effect at the time of 
consummation, the lease remains exempt regardless of a subsequent 
increase in the threshold amount.
    10. No increase in the CPI-W. If the CPI-W in effect on June 1 does 
not increase from the CPI-W in effect on June 1 of the previous year, 
the threshold amount effective the following January 1 through December 
31 will not change from the previous year. When this occurs, for the 
years that follow, the threshold is calculated based on the annual 
percentage change in the CPI-W applied to the dollar amount that would 
have resulted if decreases and any subsequent increases in the CPI-W 
had been taken into account.
    i. Net increases. If the resulting amount is greater than the 
current threshold, then the threshold effective January 1 the following 
year will increase accordingly.
    ii. Net decreases. If the resulting amount calculated is equal to 
or less than the current threshold, then the threshold effective 
January 1 the following year will not change, but future increases will 
be calculated based on the amount that would have resulted.
    11. Threshold. For purposes of Sec.  213.2(e)(1), the threshold 
amount in effect during a particular period is the amount stated below 
for that period.
    i. Prior to July 21, 2011, the threshold amount is $25,000.
    ii. From July 21, 2011 through December 31, 2011, the threshold 
amount is $50,000.
    iii. From January 1, 2012 through December 31, 2012, the threshold 
amount is $51,800.
    iv. From January 1, 2013 through December 31, 2013, the threshold 
amount is $53,000.
    v. From January 1, 2014 through December 31, 2014, the threshold 
amount is $53,500.
    vi. From January 1, 2015 through December 31, 2015, the threshold 
amount is $54,600.
    vii. From January 1, 2016 through December 31, 2016, the threshold 
amount is $54,600.

Bureau of Consumer Financial Protection

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau proposes to 
amend Regulation M, 12 CFR part 1013, as set forth below:

PART 1013--CONSUMER LEASING (REGULATION M)

0
3. The authority citation for part 1013 continues to read as follows:

    Authority: 15 U.S.C. 1604 and 1667f; Pub. L. 111-203 Sec.  
1100E, 124 Stat. 1376.

0
4. In Supplement I to part 1013, under Section 1013.2--Definitions, 
under 2(e)--Consumer Lease, paragraph 9 is revised, and paragraphs 10 
and 11 are added, to read as follows:

Supplement I to Part 1013--Official Interpretations

* * * * *


Sec.  1013.2  Definitions.

* * * * *

[[Page 51404]]

2(e) Consumer Lease

* * * * *
    9. Threshold amount. A consumer lease is exempt from the 
requirements of this part if the total contractual obligation exceeds 
the threshold amount in effect at the time of consummation. The 
threshold amount in effect during a particular time period is the 
amount stated in comment 2(e)-11 for that period. The threshold amount 
is adjusted effective January 1 of each year by any annual percentage 
increase in the Consumer Price Index for Urban Wage Earners and 
Clerical Workers (CPI-W) that was in effect on the preceding June 1. 
Comment 2(e)-11 will be amended to provide the threshold amount for the 
upcoming year after the annual percentage change in the CPI-W that was 
in effect on June 1 becomes available. Any increase in the threshold 
amount will be rounded to the nearest $100 increment. For example, if 
the annual percentage increase in the CPI-W would result in a $950 
increase in the threshold amount, the threshold amount will be 
increased by $1,000. However, if the annual percentage increase in the 
CPI-W would result in a $949 increase in the threshold amount, the 
threshold amount will be increased by $900. If a consumer lease is 
exempt from the requirements of this part because the total contractual 
obligation exceeds the threshold amount in effect at the time of 
consummation, the lease remains exempt regardless of a subsequent 
increase in the threshold amount.
    10. No increase in the CPI-W. If the CPI-W in effect on June 1 does 
not increase from the CPI-W in effect on June 1 of the previous year, 
the threshold amount effective the following January 1 through December 
31 will not change from the previous year. When this occurs, for the 
years that follow, the threshold is calculated based on the annual 
percentage change in the CPI-W applied to the dollar amount that would 
have resulted if decreases and any subsequent increases in the CPI-W 
had been taken into account.
    i. Net increases. If the resulting amount is greater than the 
current threshold, then the threshold effective January 1 the following 
year will increase accordingly.
    ii. Net decreases. If the resulting amount calculated is equal to 
or less than the current threshold, then the threshold effective 
January 1 the following year will not change, but future increases will 
be calculated based on the amount that would have resulted.
    11. Threshold. For purposes of Sec.  1013.2(e)(1), the threshold 
amount in effect during a particular period is the amount stated below 
for that period.
    i. Prior to July 21, 2011, the threshold amount is $25,000.
    ii. From July 21, 2011 through December 31, 2011, the threshold 
amount is $50,000.
    iii. From January 1, 2012 through December 31, 2012, the threshold 
amount is $51,800.
    iv. From January 1, 2013 through December 31, 2013, the threshold 
amount is $53,000.
    v. From January 1, 2014 through December 31, 2014, the threshold 
amount is $53,500.
    vi. From January 1, 2015 through December 31, 2015, the threshold 
amount is $54,600.
    vii. From January 1, 2016 through December 31, 2016, the threshold 
amount is $54,600.


    By order of the Board of Governors of the Federal Reserve 
System, July 19, 2016.
Robert deV. Frierson,
Secretary of the Board.
    Dated: July 13, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-18059 Filed 8-3-16; 8:45 am]
 BILLING CODE 6210-01-4810-AM-P

51400 Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules 5. Qualifying for exemption— Act) amended the CLA by requiring that comments may also be viewed subsequent changes. A transaction does the dollar threshold for exempt electronically or in paper in Room MP– not meet the condition for an exemption consumer credit transactions be 500 of the Board’s Martin Building (20th under § 1026.35(c)(2)(ii) merely because adjusted annually by the annual and C Streets NW.,) between 9:00 a.m. it is used to satisfy and replace an percentage increase in the Consumer and 5:00 p.m. on weekdays. existing exempt loan, unless the amount Price Index for Urban Wage Earners and Bureau: You may submit comments, of the new extension of credit is equal Clerical Workers (CPI–W). If there is no identified by Docket No. CFPB–2016– to or less than the applicable threshold annual percentage increase in the CPI– 0036 by any of the following methods: amount. For example, assume a closed- W, the Board and Bureau will not adjust • Email: FederalRegisterComments@ end loan that qualified for a this exemption threshold from the prior cfpb.gov. Include Docket No. CFPB– § 1026.35(c)(2)(ii) exemption at year. The proposal would memorialize 2016–0036 in the subject line of the consummation in year one is refinanced this as well as the agencies’ calculation email. in year ten and that the new loan method for determining the adjustment • Electronic: http:// amount is greater than the threshold in years following a year in which there www.regulations.gov. Follow the amount in effect in year ten. In these is no annual percentage increase in the instructions for submitting comments. circumstances, the creditor must CPI–W. comply with all of the applicable Because the Dodd-Frank Act also • Mail: Monica Jackson, Office of the requirements of § 1026.35(c) with requires similar adjustments in the Executive Secretary, Consumer respect to the year ten transaction if the Truth in Lending Act’s threshold for Financial Protection Bureau, 1700 G original loan is satisfied and replaced by exempt consumer credit transactions, Street NW., Washington, DC 20552. the new loan, unless another exemption the Board and the Bureau are proposing • Hand Delivery/Courier: Monica from the requirements of § 1026.35(c) similar amendments to the Jackson, Office of the Executive applies. See § 1026.35(c)(2) and commentaries to each of their respective Secretary, Consumer Financial (c)(4)(vii). regulations implementing the Truth in Protection Bureau, 1275 First Street NE., * * * * * Lending Act elsewhere in the Federal Washington, DC 20002. Register. Instructions: All submissions should Thomas J. Curry, include the agency name and docket Comptroller of the Currency. DATES: Comments must be received on or before September 6, 2016. number or Regulatory Information By order of the Board of Governors of the Number (RIN) for this rulemaking. Federal Reserve System, July 19, 2016. ADDRESSES: Interested parties are encouraged to submit written comments Because paper mail in the Washington, Robert deV. Frierson, DC area and at the Bureau is subject to jointly to the Board and the Bureau. Secretary of the Board. delay, commenters are encouraged to Commenters are encouraged to use the Dated: July 13, 2016. title ‘‘Consumer Leasing (Regulation submit comments electronically. In Richard Cordray, M)’’ to facilitate the organization and general, all comments received will be Director, Bureau of Consumer Financial distribution of comments among the posted without change to http:// Protection. agencies. Interested parties are invited www.regulations.gov. In addition, [FR Doc. 2016–18058 Filed 8–3–16; 8:45 am] to submit written comments to: comments will be available for public BILLING CODE 4810–33–P; 6210–01–P; 4810–AM–P Board: You may submit comments, inspection and copying at 1275 First identified by Docket No. R–1545 or RIN Street NE., Washington, DC 20002, on 7100 AE–56, by any of the following official business days between the hours FEDERAL RESERVE SYSTEM methods: of 10 a.m. and 5 p.m. eastern time. You • Agency Web site: http:// can make an appointment to inspect the 12 CFR Part 213 www.federalreserve.gov. Follow the documents by telephoning (202) 435– [Docket No. R–1545] instructions for submitting comments at 7275. http://www.federalreserve.gov/ All comments, including attachments RIN 7100 AE–56 and other supporting materials, will generalinfo/foia/ProposedRegs.cfm. BUREAU OF CONSUMER FINANCIAL • Federal eRulemaking Portal: http:// become part of the public record and PROTECTION www.regulations.gov. Follow the subject to public disclosure. Sensitive instructions for submitting comments. personal information, such as account 12 CFR Part 1013 • Email: regs.comments@ numbers or Social Security numbers, federalreserve.gov. Include the docket should not be included. Comments will [Docket No. CFPB–2016–0036] number in the subject line of the not be edited to remove any identifying message. or contact information. Consumer Leasing (Regulation M) • Fax: (202) 452–3819 or (202) 452– FOR FURTHER INFORMATION CONTACT: AGENCY: Board of Governors of the 3102. Board: Vivian W. Wong, Senior Federal Reserve System (Board); and • Mail: Robert deV. Frierson, Counsel, Division of Consumer and Bureau of Consumer Financial Secretary, Board of Governors of the Community Affairs, Board of Governors Protection (Bureau). Federal Reserve System, 20th Street and of the Federal Reserve System, at (202) ACTION: Proposed rule; official Constitution Avenue NW., Washington, 452–3667; for users of interpretations. DC 20551. Telecommunications Device for the Deaf rmajette on DSK2TPTVN1PROD with PROPOSALS All public comments will be made (TDD) only, contact (202) 263–4869. SUMMARY: The Board and the Bureau are available on the Board’s Web site at proposing to amend the official http://www.federalreserve.gov/ Bureau: Shaakira Gold-Ramirez, interpretations and commentary for the generalinfo/foia/ProposedRegs.cfm as Paralegal Specialist, Jaclyn Maier, agencies’ regulations that implement the submitted, unless modified for technical Counsel, Office of Regulations, Consumer Leasing Act (CLA). The reasons. Accordingly, comments will Consumer Financial Protection Bureau, Dodd-Frank Wall Street Reform and not be edited to remove any identifying at (202) 435–7700. Consumer Protection Act (Dodd-Frank or contact information. Public SUPPLEMENTARY INFORMATION: VerDate Sep<11>2014 14:52 Aug 03, 2016 Jkt 238001 PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 E:\FR\FM\04AUP1.SGM 04AUP1

Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules 51401 I. Background Section 213.2(e)(1) of the Board’s calculation would remain in comment The Dodd-Frank Wall Street Reform Regulation M and § 1013.2(e)(1) of the 2(e)–9. and Consumer Protection Act of 2010 Bureau’s Regulation M, and their As stated in the Board Final (Dodd-Frank Act) increased the accompanying commentaries, provide Threshold Rules, if there is no annual threshold in the Consumer Leasing Act that the exemption threshold will be percentage increase in the CPI–W, the (CLA) for exempt consumer leases from adjusted annually effective January 1 of Board and Bureau will not adjust the $25,000 to $50,000, effective July 21, each year based on any annual exemption threshold from the prior 2011.1 In addition, the Dodd-Frank Act percentage increase in the CPI–W that year.8 This position is consistent with requires that, on and after December 31, was in effect on the preceding June 1. Section 1100E(b) of the Dodd-Frank Act, 2011, this threshold be adjusted Any increase in the threshold amount which states that the threshold must be annually for inflation by the annual will be rounded to the nearest $100 adjusted by the ‘‘annual percentage percentage increase in the Consumer increment. For example, if the annual increase’’ in the CPI–W (emphasis Price Index for Urban Wage Earners and percentage increase in the CPI–W would added). The Board and the Bureau are Clerical Workers (CPI–W), as published result in a $950 increase in the proposing to memorialize this concept by the Bureau of Labor Statistics. In threshold amount, the threshold amount in proposed comment 2(e)–10, which April 2011, the Board issued a final rule will be increased by $1,000. However, if would provide that if the CPI–W in amending Regulation M (which the annual percentage increase in the effect on June 1 does not increase from implements the CLA) consistent with CPI–W would result in a $949 increase the CPI–W in effect on June 1 of the these provisions of the Dodd-Frank Act in the threshold amount, the threshold previous year, the threshold amount along with a similar final rule amending amount will be increased by $900.6 If effective the following January 1 Regulation Z (which implements the there is no annual percentage increase through December 31 will not change Truth in Lending Act) (collectively, the in the CPI–W, the Board and Bureau from the previous year. For example, if Board Final Threshold Rules).2 will not adjust the exemption threshold the threshold in effect from January 1, Title X of the Dodd-Frank Act from the prior year. 2019, through December 31, 2019, is transferred rulemaking authority for a Since 2011, the Board and the Bureau $55,500 and the CPI–W in effect on June number of consumer financial have adjusted the Regulation M 1 of 2019, indicates a 1.1 percent protection laws from the Board to the exemption threshold annually, decrease from the CPI–W in effect on Bureau, effective July 21, 2011. In consistent with these rules. The Board June 1, 2018, the threshold in effect for connection with this transfer of and the Bureau last published final January 1, 2020, through December 31, rulemaking authority, the Bureau issued rules implementing the exemption 2020, will remain $55,500. its own Regulation M implementing the threshold in effect for January 1, 2016, Proposed comment 2(e)–10 would CLA in an interim final rule, 12 CFR through December 31, 2016, in further set forth the calculation method part 1013 (Bureau Interim Final Rule).3 November 2015.7 the agencies would use in years The Bureau Interim Final Rule following a year in which the exemption substantially duplicated the Board’s II. Commentary Revision threshold was not adjusted because Regulation M, including the revisions to The Board and the Bureau are there was no increase in the CPI–W the threshold for exempt transactions proposing new commentary to from the previous year. The proposed made by the Board in April 2011. In memorialize the calculation method calculation method would ensure that April 2016, the Bureau adopted the used by the agencies each year to adjust the values for the exemption threshold Bureau Interim Final Rule as final, the exemption threshold. Comment keep pace with the CPI–W as subject to intervening final rules 2(e)–9 to the Board’s and Bureau’s contemplated by Section 1100E(b) of the published by the Bureau.4 Although the Regulation M currently provides the Dodd-Frank Act. Bureau has the authority to issue rules threshold amount in effect during a Specifically, as set forth under to implement the CLA for most entities, particular period and details the rules proposed comment 2(e)–10, for the the Board retains authority to issue rules the agencies use for rounding the years after a year in which the threshold under the CLA for certain motor vehicle threshold calculation to the nearest did not change because the CPI–W in dealers covered by section 1029(a) of the $100 or $1,000 increment, as discussed effect on June 1 decreased from the CPI– Dodd-Frank Act, and the Board’s above in part I, ‘‘Background.’’ W in effect on June 1 of the previous Regulation M continues to apply to The Board and the Bureau are year, the threshold is calculated by those entities.5 proposing to revise comment 2(e)–9 by applying the annual percentage change moving the text regarding the threshold in the CPI–W to the dollar amount that 1 Public Law 111–203, section 1100E, 124 Stat. amount that is in effect during a would have resulted if the decreases 1376 (2010). particular period to a new proposed and any subsequent increases in the 2 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. comment 2(e)–11. The discussion of CPI–W had been taken into account. 4, 2011). 3 76 FR 78500 (Dec. 19, 2011). how the agencies round the threshold Proposed comment 2(e)–10.i further 4 81 FR 25323 (April 28, 2016). states that, if the resulting amount is 5 Section 1029(a) of the Dodd-Frank Act states: motor vehicles; and (B) in which (i) the extension greater than the current threshold, then ‘‘Except as permitted in subsection (b), the Bureau of retail credit or retail leases are provided directly the threshold effective January 1 the may not exercise any rulemaking, supervisory, to consumers; and (ii) the contract governing such following year will increase enforcement, or any other authority * * * over a extension of retail credit or retail leases is not routinely assigned to an unaffiliated third party accordingly. motor vehicle dealer that is predominantly engaged For example, assume that the rmajette on DSK2TPTVN1PROD with PROPOSALS in the sale and servicing of motor vehicles, the finance or leasing source; or (3) offers or provides leasing and servicing of motor vehicles, or both.’’ a consumer financial product or service not threshold in effect from January 1, 2019, 12 U.S.C. 5519(a). Section 1029(b) of the Dodd- involving or related to the sale, financing, leasing, through December 31, 2019, is $55,500 Frank Act states: ‘‘Subsection (a) shall not apply to rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor vehicle parts, or and that, due to a 1.1 percent decrease any person, to the extent that such person (1) provides consumers with any services related to any related or ancillary product or service.’’ 12 from the CPI–W in effect on June 1, residential or commercial mortgages or self- U.S.C. 5519(b). 6 See comments 2(e)–9 in Supplements I of 12 8 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (‘‘[A]n financing transactions involving real property; (2) operates a line of business (A) that involves the CFR part 213 and 12 CFR part 1013. annual period of deflation or no inflation would not extension of retail credit or retail leases involving 7 80 FR 73945 (Nov. 27, 2015). require a change in the threshold amount.’’). VerDate Sep<11>2014 14:52 Aug 03, 2016 Jkt 238001 PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 E:\FR\FM\04AUP1.SGM 04AUP1

51402 Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules 2018, to the CPI–W in effect on June 1, addition, the Bureau has consulted, or will not have a significant economic 2019, the threshold in effect from offered to consult with, the prudential impact on a substantial number of small January 1, 2020, through December 31, regulators, the Securities and Exchange entities. Nevertheless, the Board is 2020, remains at $55,500. If, however, Commission, the Department of Housing publishing an initial regulatory the threshold had been adjusted and Urban Development, the Federal flexibility analysis and requests public downward to reflect the decrease in the Housing Finance Agency, the Federal comment on all aspects of its analysis. CPI–W over that time period, the Trade Commission, and the Department The Board will, if necessary, conduct a threshold in effect from January 1, 2020, of the Treasury, including regarding final regulatory flexibility analysis after through December 31, 2020, would have consistency with any prudential, considering the comments received been $54,900. Further assume that the market, or systemic objectives during the public comment period. CPI–W in effect on June 1, 2020, administered by such agencies. 1. Statement of the need for, and increased by 1.6 percent from the CPI– The Bureau has chosen to evaluate the objectives of, the proposed rule. The W in effect on June 1, 2019. The benefits, costs and impacts of the proposed rule would memorialize the calculation for the threshold that will be proposed commentary against the calculation method used by the Board in effect from January 1, 2021, through current state of the world, which takes each year to adjust the exemption December 31, 2021, is based on the into account the current regulatory threshold in accordance with Section impact of a 1.6 percent increase in the regime. The Bureau is not aware of any 1100E of the Dodd-Frank Act. CPI–W on $54,900, rather than $55,500, significant benefits or costs to 2. Small entities affected by the resulting in a 2021 threshold of $55,800. consumers or covered persons proposed rule. Motor vehicle dealers Furthermore, comment 2(e)–10.ii associated with the proposal relative to that are subject to the Board’s states that, if the resulting amount the baseline. The Board previously Regulation M and offer consumer leases calculated is equal to or less than the stated that if there is no annual that may be exempt from Regulation M current threshold, then the threshold percentage increase in the CPI–W, then under 12 CFR 213.2(e) would be effective January 1 the following year the Board (and now the Bureau) will not affected. While the total number of will not change, but future increases adjust the exemption threshold from the small entities likely to be affected by the will be calculated based on the amount prior year.10 The proposal memorializes proposed rule is unknown, the Board that would have resulted. To illustrate, this in official commentary. The does not believe the proposed rule will assume in the example above that the proposal also clarifies how the have a significant economic impact on CPI–W in effect on June 1, 2020, threshold would be calculated for years the entities that it affects. The Board increased by only 0.6 percent from the after a year in which the threshold did invites comment on the effect of the CPI–W in effect on June 1, 2019. The not change. The Bureau believes that proposed rule on small entities. calculation for the threshold that will be this clarification memorializes the 3. Recordkeeping, reporting, and in effect from January 1, 2021, through method that the Bureau would be compliance requirements. The proposed December 31, 2021, is based on the expected to use: This method holds the rule would not impose any impact of a 0.6 percent increase in the threshold fixed until a notional recordkeeping, reporting, or compliance CPI–W on $54,900. The resulting threshold calculated using the Bureau’s requirements. amount is $55,200, which is lower than methodology, but taking into account 4. Other Federal rules. The Board has $55,500, the threshold in effect from both decreases and increases in the CPI– not identified any likely duplication, January 1, 2020, through December 31, W, exceeds the actual threshold. The overlap and/or potential conflict 2020. Therefore, the threshold in effect Bureau requests comment on this point. between the proposed rule and any from January 1, 2021, through December Thus, the Bureau believes that the Federal rule. 31, 2021, will remain $55,500. However, proposed rule does not change the 5. Significant alternatives to the the calculation for the threshold that regulatory regime relative to the proposed revisions. The Board solicits will be in effect from January 1, 2022, baseline and creates no significant comment on any significant alternatives through December 31, 2022, will apply benefits, costs, or impacts. that would reduce the regulatory burden the percentage change in the CPI–W to The proposed rule will have no associated on small entities with this $55,200, the amount that would have unique impact on depository proposed rule. resulted based on the 0.6 percent change institutions or credit unions with $10 Bureau: The RFA generally requires from the CPI–W in effect on June 1, billion or less in assets as described in an agency to conduct an initial 2019, to the CPI–W in effect on June 1, section 1026(a) of the Dodd-Frank Act regulatory flexibility analysis (IRFA) 2020. or on rural consumers. The Bureau does and a final regulatory flexibility analysis The agencies request comment on all not expect this final rule to affect (FRFA) of any rule subject to notice- aspects of the proposed rule. consumers’ access to credit. and-comment rulemaking III. Regulatory Analysis requirements.12 These analyses must Regulatory Flexibility Act ‘‘describe the impact of the proposed Bureau’s Dodd-Frank Act Section Board: The Regulatory Flexibility Act rule on small entities’’.13 An IRFA or 1022(b)(2) Analysis (RFA) requires an agency to publish an In developing this proposal, the initial regulatory flexibility analysis 12 5 U.S.C. 601 et seq. 13 Id. at 603(a). For purposes of assessing the Bureau has considered potential with a proposed rule or certify that the impacts of the proposed rule on small entities, benefits, costs, and impacts.9 In proposed rule will not have a significant ‘‘small entities’’ is defined in the RFA to include economic impact on a substantial rmajette on DSK2TPTVN1PROD with PROPOSALS small businesses, small not-for-profit organizations, 9 Specifically, section 1022(b)(2)(A) calls for the number of small entities.11 Based on its and small government jurisdictions. Id. at 601(6). A Bureau to consider the potential benefits and costs analysis, and for the reasons stated ‘‘small business’’ is determined by application of of a regulation to consumers and covered persons, Small Business Administration regulations and including the potential reduction of access by below, the Board believes that the rule reference to the North American Industry consumers to consumer financial products or Classification System (NAICS) classifications and 10 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (‘‘[A]n services; the impact on depository institutions and size standards. Id. at 601(3). A ‘‘small organization’’ credit unions with $10 billion or less in total assets annual period of deflation or no inflation would not is any ‘‘not-for-profit enterprise which is as described in section 1026 of the Act; and the require a change in the threshold amount.’’). independently owned and operated and is not impact on consumers in rural areas. 11 See 5 U.S.C. 601 et seq. dominant in its field.’’ Id. at 601(4). A ‘‘small VerDate Sep<11>2014 14:52 Aug 03, 2016 Jkt 238001 PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 E:\FR\FM\04AUP1.SGM 04AUP1

Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules 51403 FRFA is not required if the agency PART 213—CONSUMER LEASING in the CPI–W applied to the dollar certifies that the rule will not have a (REGULATION M) amount that would have resulted if significant economic impact on a decreases and any subsequent increases substantial number of small entities.14 ■ 1. The authority citation for part 213 in the CPI–W had been taken into The Bureau also is subject to certain continues to read as follows: account. additional procedures under the RFA Authority: 15 U.S.C. 1604 and 1667f; Pub. i. Net increases. If the resulting involving the convening of a panel to L. 111–203 § 1100E, 124 Stat. 1376. amount is greater than the current consult with small business ■ 2. In Supplement I to Part 213, under threshold, then the threshold effective representatives prior to proposing a rule Section 213.2—Definitions, under 2(e) January 1 the following year will for which an IRFA is required.15 Consumer Lease, paragraph 9. is increase accordingly. An IRFA is not required for this revised, and paragraphs 10. and 11. are ii. Net decreases. If the resulting proposal because if adopted it would added, to read as follows: amount calculated is equal to or less not have a significant economic impact than the current threshold, then the Supplement I to Part 213—Official Staff threshold effective January 1 the on a substantial number of small Interpretations following year will not change, but entities. As discussed in the Bureau’s Section 1022(b)(2) Analysis above, this * * * * * future increases will be calculated based proposal does not introduce costs or on the amount that would have resulted. § 213.2 Definitions. 11. Threshold. For purposes of benefits to covered persons because the * * * * * § 213.2(e)(1), the threshold amount in proposal seeks only to clarify the effect during a particular period is the method of threshold adjustment which 2(e) Consumer Lease amount stated below for that period. has already been established in previous * * * * * i. Prior to July 21, 2011, the threshold Agency rules. Therefore this proposed 9. Threshold amount. A consumer amount is $25,000. rule would not have a significant impact lease is exempt from the requirements of ii. From July 21, 2011 through on small entities. this Part if the total contractual December 31, 2011, the threshold Certification obligation exceeds the threshold amount amount is $50,000. in effect at the time of consummation. iii. From January 1, 2012 through Accordingly, the Bureau Director, by The threshold amount in effect during a December 31, 2012, the threshold signing below, certifies that this particular time period is the amount amount is $51,800. proposal, if adopted, would not have a stated in comment 2(e)–11 for that iv. From January 1, 2013 through significant economic impact on a period. The threshold amount is December 31, 2013, the threshold substantial number of small entities. adjusted effective January 1 of each year amount is $53,000. by any annual percentage increase in v. From January 1, 2014 through Paperwork Reduction Act the Consumer Price Index for Urban December 31, 2014, the threshold In accordance with the Paperwork Wage Earners and Clerical Workers amount is $53,500. Reduction Act of 1995,16 the agencies (CPI–W) that was in effect on the vi. From January 1, 2015 through reviewed this proposed rule. No preceding June 1. Comment 2(e)–11 will December 31, 2015, the threshold collections of information pursuant to be amended to provide the threshold amount is $54,600. the Paperwork Reduction Act are amount for the upcoming year after the vii. From January 1, 2016 through contained in the proposed rule. annual percentage change in the CPI–W December 31, 2016, the threshold that was in effect on June 1 becomes amount is $54,600. List of Subjects available. Any increase in the threshold Bureau of Consumer Financial 12 CFR Part 213 amount will be rounded to the nearest Protection $100 increment. For example, if the Advertising, Consumer leasing, annual percentage increase in the CPI– Authority and Issuance Consumer protection, Federal Reserve W would result in a $950 increase in the For the reasons set forth in the System, Reporting and recordkeeping threshold amount, the threshold amount preamble, the Bureau proposes to requirements. will be increased by $1,000. However, if amend Regulation M, 12 CFR part 1013, 12 CFR Part 1013 the annual percentage increase in the as set forth below: CPI–W would result in a $949 increase Advertising, Consumer leasing, in the threshold amount, the threshold PART 1013—CONSUMER LEASING Reporting and recordkeeping amount will be increased by $900. If a (REGULATION M) requirements, Truth in Lending. consumer lease is exempt from the requirements of this Part because the ■ 3. The authority citation for part 1013 Board of Governors of the Federal continues to read as follows: total contractual obligation exceeds the Reserve System threshold amount in effect at the time of Authority: 15 U.S.C. 1604 and 1667f; Pub. Text of Proposed Revisions consummation, the lease remains L. 111–203 § 1100E, 124 Stat. 1376. exempt regardless of a subsequent ■ 4. In Supplement I to part 1013, under For the reasons set forth in the increase in the threshold amount. Section 1013.2—Definitions, under preamble, the Board proposes to amend 10. No increase in the CPI–W. If the 2(e)—Consumer Lease, paragraph 9 is Regulation M, 12 CFR part 213, as set CPI–W in effect on June 1 does not revised, and paragraphs 10 and 11 are rmajette on DSK2TPTVN1PROD with PROPOSALS forth below: increase from the CPI–W in effect on added, to read as follows: June 1 of the previous year, the governmental jurisdiction’’ is the government of a threshold amount effective the Supplement I to Part 1013—Official city, county, town, township, village, school following January 1 through December Interpretations district, or special district with a population of less than 50,000. Id. at 601(5). 31 will not change from the previous * * * * * 14 Id. at 605(b). year. When this occurs, for the years 15 Id. at 609. that follow, the threshold is calculated § 1013.2 Definitions. 16 44 U.S.C. 3506; 5 CFR 1320. based on the annual percentage change * * * * * VerDate Sep<11>2014 14:52 Aug 03, 2016 Jkt 238001 PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 E:\FR\FM\04AUP1.SGM 04AUP1

51404 Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules 2(e) Consumer Lease effect during a particular period is the Consumer Price Index for Urban Wage * * * * * amount stated below for that period. Earners and Clerical Workers (CPI–W). 9. Threshold amount. A consumer i. Prior to July 21, 2011, the threshold If there is no annual percentage increase lease is exempt from the requirements of amount is $25,000. in the CPI–W, the Board and Bureau this part if the total contractual ii. From July 21, 2011 through will not adjust this exemption threshold obligation exceeds the threshold amount December 31, 2011, the threshold from the prior year. The proposal would in effect at the time of consummation. amount is $50,000. memorialize this as well as the agencies’ The threshold amount in effect during a iii. From January 1, 2012 through calculation method for determining the particular time period is the amount December 31, 2012, the threshold adjustment in years following a year in stated in comment 2(e)–11 for that amount is $51,800. which there is no annual percentage period. The threshold amount is iv. From January 1, 2013 through increase in the CPI–W. adjusted effective January 1 of each year December 31, 2013, the threshold Because the Dodd-Frank Act also by any annual percentage increase in amount is $53,000. requires similar adjustments in the the Consumer Price Index for Urban v. From January 1, 2014 through Consumer Leasing Act’s threshold for Wage Earners and Clerical Workers December 31, 2014, the threshold exempt consumer leases, the Board and (CPI–W) that was in effect on the amount is $53,500. the Bureau are proposing similar preceding June 1. Comment 2(e)–11 will vi. From January 1, 2015 through amendments to the commentaries to be amended to provide the threshold December 31, 2015, the threshold each of their respective regulations amount for the upcoming year after the amount is $54,600. implementing the Consumer Leasing annual percentage change in the CPI–W vii. From January 1, 2016 through Act elsewhere in the Federal Register. that was in effect on June 1 becomes December 31, 2016, the threshold DATES: Comments must be received on available. Any increase in the threshold amount is $54,600. or before September 6, 2016. amount will be rounded to the nearest ADDRESSES: Interested parties are $100 increment. For example, if the By order of the Board of Governors of the encouraged to submit written comments annual percentage increase in the CPI– Federal Reserve System, July 19, 2016. jointly to the Board and the Bureau. W would result in a $950 increase in the Robert deV. Frierson, Commenters are encouraged to use the threshold amount, the threshold amount Secretary of the Board. title ‘‘Truth in Lending (Regulation Z)’’ will be increased by $1,000. However, if Dated: July 13, 2016. to facilitate the organization and the annual percentage increase in the Richard Cordray, distribution of comments among the CPI–W would result in a $949 increase Director, Bureau of Consumer Financial agencies. Interested parties are invited in the threshold amount, the threshold Protection. to submit written comments to: amount will be increased by $900. If a [FR Doc. 2016–18059 Filed 8–3–16; 8:45 am] Board: You may submit comments, consumer lease is exempt from the BILLING CODE 6210–01–4810–AM–P identified by Docket No. R–7100 or RIN requirements of this part because the 7100 AE–57, by any of the following total contractual obligation exceeds the methods: threshold amount in effect at the time of FEDERAL RESERVE SYSTEM • Agency Web site: http:// consummation, the lease remains www.federalreserve.gov. Follow the exempt regardless of a subsequent 12 CFR Part 226 instructions for submitting comments at increase in the threshold amount. http://www.federalreserve.gov/ [Docket No. R–1546] 10. No increase in the CPI–W. If the generalinfo/foia/ProposedRegs.cfm. CPI–W in effect on June 1 does not RIN 7100 AE–57 increase from the CPI–W in effect on • Federal eRulemaking Portal: http:// June 1 of the previous year, the BUREAU OF CONSUMER FINANCIAL www.regulations.gov. Follow the threshold amount effective the PROTECTION instructions for submitting comments. following January 1 through December • Email: regs.comments@ 31 will not change from the previous 12 CFR Part 1026 federalreserve.gov. Include the docket year. When this occurs, for the years number in the subject line of the that follow, the threshold is calculated [Docket No. CFPB–2016–0037] message. based on the annual percentage change • Fax: (202) 452–3819 or (202) 452– Truth in Lending (Regulation Z) 3102. in the CPI–W applied to the dollar amount that would have resulted if AGENCY: Board of Governors of the • Mail: Robert deV. Frierson, decreases and any subsequent increases Federal Reserve System (Board); and Secretary, Board of Governors of the in the CPI–W had been taken into Bureau of Consumer Financial Federal Reserve System, 20th Street and account. Protection (Bureau). Constitution Avenue NW., Washington, i. Net increases. If the resulting ACTION: Proposed rule; official DC 20551. amount is greater than the current interpretations. All public comments will be made threshold, then the threshold effective available on the Board’s Web site at January 1 the following year will SUMMARY: The Board and the Bureau are http://www.federalreserve.gov/ increase accordingly. proposing to amend the official generalinfo/foia/ProposedRegs.cfm as ii. Net decreases. If the resulting interpretations and commentary for the submitted, unless modified for technical rmajette on DSK2TPTVN1PROD with PROPOSALS amount calculated is equal to or less agencies’ regulations that implement the reasons. Accordingly, comments will than the current threshold, then the Truth in Lending Act (TILA). The Dodd- not be edited to remove any identifying threshold effective January 1 the Frank Wall Street Reform and Consumer or contact information. Public following year will not change, but Protection Act (Dodd-Frank Act) comments may also be viewed future increases will be calculated based amended TILA by requiring that the electronically or in paper in Room MP– on the amount that would have resulted. dollar threshold for exempt consumer 500 of the Board’s Martin Building (20th 11. Threshold. For purposes of credit transactions be adjusted annually and C Streets NW.) between 9:00 a.m. § 1013.2(e)(1), the threshold amount in by the annual percentage increase in the and 5:00 p.m. on weekdays. VerDate Sep<11>2014 14:52 Aug 03, 2016 Jkt 238001 PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 E:\FR\FM\04AUP1.SGM 04AUP1


Document Created: 2016-08-04 02:53:40
Document Modified: 2016-08-04 02:53:40
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionProposed rule; official interpretations.
DatesComments must be received on or before September 6, 2016.
ContactBoard: Vivian W. Wong, Senior Counsel, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263- 4869.
FR Citation81 FR 51400 
RIN Number7100 AE56
CFR Citation12 CFR 1013
12 CFR 213
CFR AssociatedTruth in Lending; Advertising; Consumer Leasing; Consumer Protection; Federal Reserve System and Reporting and Recordkeeping Requirements
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR