[Federal Register Volume 76, Number 118 (Monday, June 20, 2011)]
[Rules and Regulations]
[Pages 35722-35723]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15178]


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FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Regulation Z; Docket No. R-1424]


Truth in Lending

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule, staff commentary.

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SUMMARY: The Board is publishing a final rule amending the staff 
commentary that interprets the requirements of Regulation Z, which 
implements the Truth in Lending Act (TILA). Effective July 21, 2011, 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act) amends TILA by increasing the threshold for exempt consumer 
credit transactions from $25,000 to $50,000. In addition, the Dodd-
Frank Act requires that this threshold be adjusted annually by any 
annual percentage increase in the Consumer Price Index for Urban Wage 
Earners and Clerical Workers (CPI-W). Accordingly, based on the annual 
percentage increase in the CPI-W as of June 1, 2011, the Board is 
adjusting the exemption threshold from $50,000 to $51,800, effective 
January 1, 2012.
    Because the Dodd-Frank Act also requires similar adjustments in the 
Consumer Leasing Act's threshold for exempt consumer leases, the Board 
is making similar amendments to Regulation M elsewhere in today's 
Federal Register.

DATES: This final rule is effective January 1, 2012.

FOR FURTHER INFORMATION CONTACT: Lorna M. Neill, Senior Attorney, 
Division of Consumer and Community Affairs, Board of Governors of the 
Federal Reserve System, at (202) 452-3667 or 452-2412; for users of 
Telecommunications Device for the Deaf (TDD) only, contact (202) 263-
4869.

SUPPLEMENTARY INFORMATION:

I. Background

    Effective July 21, 2011, the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010 (Dodd-Frank Act) increases the 
threshold in the Truth in Lending Act (TILA) for exempt consumer credit 
transactions from $25,000 to $50,000. Public Law 111-203 Sec.  1100E, 
124 Stat. 1376 (2010). In addition, the Dodd-Frank Act requires that 
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 Z (which implements TILA) consistent with these provisions 
of the Dodd-Frank Act. 76 FR 18354 (Apr. 4, 2011).
    As amended, Sec.  226.3(b)(1)(ii) of Regulation Z provides 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. Furthermore, 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. See comment 3(b)-1.

II. Adjustment and Commentary Revision

    Effective January 1, 2012, the adjusted exemption threshold amount 
is $51,800. This adjustment is based on the CPI-W index in effect on 
June 1, 2011, which was reported on May 13, 2011. The Bureau of Labor 
Statistics publishes consumer-based indices monthly, but does not 
report a CPI change on June 1; adjustments are reported in the middle 
of the month. The CPI-W is a subset of the CPI-U index (based on all 
urban consumers) and represents approximately 32 percent of the U.S. 
population. The adjustment reflects a 3.6 percent increase in the CPI-W 
from April 2010 to April 2011 and is rounded to the nearest $100 
increment. Accordingly, the Board is revising comment 3(b)-1 (as 
amended effective July 21, 2011) to add a new subparagraph 3(b)-1.iii 
stating that, from January 1, 2012 through December 31, 2012, the 
threshold amount is $51,800. This revision is effective January 1, 
2012.
    Under the Administrative Procedures Act, notice and opportunity for 
public comment are not required if the Board finds that notice and 
public comment are unnecessary. 5 U.S.C. 553(b)(B). This annual 
adjustment is required by statute. The amendment in this notice is 
technical and applies the method previously established in Regulation Z 
for determining any adjustments to the exemption threshold. For these 
reasons, the Board has determined that publishing a notice of proposed 
rulemaking and providing opportunity for public comment are 
unnecessary. Therefore, the amendment is adopted in final form.

III. Regulatory Flexibility Analysis

    The Board certifies that this amendment to Regulation Z will not 
have a significant economic impact on a substantial number of small 
entities. The only change is to adjust the exemption threshold to 
reflect any annual percentage increase in the CPI-W. This change is 
required by statute. In addition, the Board believes that this 
amendment will not have a significant impact on a substantial number of 
small entities for the reasons stated in its April 2011 final rule. See 
76 FR 18354, 18360-61.

List of Subjects in 12 CFR Part 226

    Advertising, Consumer protection, Federal Reserve System, Reporting 
and recordkeeping requirements, Truth in Lending.

Text of Final Revisions

    For the reasons set forth in the preamble, the Board amends 
Regulation Z, 12 CFR part 226, as set forth below:

PART 226--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 226 continues to read as follows:

    Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), and 
1639(l); Pub. L. 111-24 Sec.  2, 123 Stat. 1734; Pub. L. 111-203, 
124 Stat. 1376.

Subpart B--Open-End Credit

0
2. In Supplement I to Part 226 as amended effective July 21, 2011 in 76 
FR 18354 (Apr. 4, 2011), under Section 226.3--Exempt Transactions, 
under 3(b)

[[Page 35723]]

Credit over applicable threshold amount, paragraph 1.iii is added 
effective January 1, 2012.
    The addition reads as follows:

Supplement I to Part 226--Official Staff Interpretations

* * * * *

Subpart A--General

* * * * *

Sec.  226.3--Exempt Transactions

* * * * *
    3(b) Credit over applicable threshold amount.
    1. Threshold amount. * * *
* * * * *
    iii. From January 1, 2012 through December 31, 2012, the 
threshold amount is $51,800.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, June 13, 2011.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2011-15178 Filed 6-17-11; 8:45 am]
BILLING CODE 6210-01-P