This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

78632 

Vol. 75, No. 241 

Thursday, December 16, 2010 

1Specifically, the CLA currently defines a 

consumer lease as ‘‘a contract in the form of a lease 

or bailment for the use of personal property by a 

natural person for a period of time exceeding four 

months, and for a total contractual obligation not 

exceeding $25,000, primarily for personal, family, 

or household purposes, whether or not the lessee 

has the option to purchase or otherwise become the 

owner of the property at expiration of the lease 

***’’ 15 U.S.C. 1667(1) (emphasis added). 

Regulation M implements this definition in 

§ 213.2(e). 

FEDERAL RESERVE SYSTEM 

12 CFR Part 213 

[Regulation M; Docket No. R–1400] 

RIN 7100–AD60 

Consumer Leasing 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: Effective July 21, 2011, the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act) amends the Consumer Leasing Act 

(CLA) by increasing the threshold for 

exempt consumer leases from $25,000 to 

$50,000. In addition, the Dodd-Frank 

Act provides that, on or after December 

31, 2011, this threshold must be 

adjusted annually by any annual 

percentage increase in the Consumer 

Price Index for Urban Wage Earners and 

Clerical Workers. Accordingly, the 

Board is proposing to make 

corresponding amendments to 

Regulation M, which implements the 

CLA, and to the accompanying staff 

commentary. Because the Dodd-Frank 

Act also increases the Truth in Lending 

Act’s threshold for exempt consumer 

credit transactions from $25,000 to 

$50,000, the Board is proposing similar 

amendments to Regulation Z elsewhere 

in today’s Federal Register. 

DATES: Comments must be received on 

or before February 1, 2011. Comments 

on the Paperwork Reduction Act 

analysis set forth in Section V of this 

Federal Register notice must be 

received on or before February 14, 2011. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1400 and 

RIN No. 7100–AD60, 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. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include the docket number and RIN in 

the subject line of the message. 

• Facsimile: (202) 452–3819 or (202) 

452–3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper form in Room MP–500 of the 

Board’s Martin Building (20th and C 

Streets, NW.) between 9 a.m. and 5 p.m. 

on weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Stephen Shin, Attorney, or Benjamin K. 

Olson, Counsel, 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 

The Consumer Leasing Act 

The Consumer Leasing Act (CLA), 15 

U.S.C. 1667–1667e, was enacted in 1976 

as an amendment to the Truth in 

Lending Act (TILA), 15 U.S.C. 1601 et 

seq. The purpose of the CLA is to ensure 

meaningful and accurate disclosure of 

the terms of personal property leases for 

personal, family, or household use. The 

CLA is implemented by the Board’s 

Regulation M (12 CFR part 213). 

The CLA and Regulation M require 

lessors to provide consumers with 

uniform cost and other disclosures 

about consumer lease transactions. They 

generally apply to consumer leases for 

the use of personal property in which 

the contractual obligation has a term of 

more than four months. An automobile 

lease is the most common type of 

consumer lease covered by the CLA and 

Regulation M. However, if the lessee’s 

total contractual obligation under the 

lease exceeds $25,000, the CLA and 

Regulation M do not apply. See 15 

U.S.C. 1667(1); 12 CFR 213.2(e).1

The Dodd-Frank Wall Street Reform and 

Consumer Protection Act 

This proposed rule implements 

Section 1100E of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act of 2010 (Dodd-Frank Act), which 

was signed into law on July 21, 2010. 

Public Law 111–203 § 1100E, 124 Stat. 

1376 (2010). The Dodd-Frank Act raises 

the CLA’s $25,000 exemption threshold 

to $50,000. In addition, the Dodd-Frank 

Act requires that, on or after December 

31, 2011, the threshold shall 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. 

Therefore, from July 21, 2011 to 

December 31, 2011, the threshold dollar 

amount will be $50,000. Beginning on 

January 1, 2012, the $50,000 threshold 

will be adjusted annually based on any 

annual percentage increase in the CPI– 

W. 

The Board is proposing to amend 

§ 213.2(e), the accompanying 

commentary, and the commentary to 

§ 213.7(a) for consistency with the 

amendments to the CLA’s exemption 

threshold. In addition, because the 

Dodd-Frank Act makes similar 

amendments to TILA’s exemption 

threshold for consumer credit 

transactions, the Board is proposing 

elsewhere in today’s Federal Register to 

amend Regulation Z, which implements 

the provisions of TILA that do not 

address consumer leases. 

Effective Date 

Section 1100H of the Dodd-Frank Act 

provides that Section 1100E will 

become effective on the designated 

transfer date, as defined by Section 1062 

of that Act. Section 1062 of the DoddFrank Act requires, in relevant part, the 

Secretary of the Treasury to designate a 


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Federal Register / Vol. 75, No. 241 / Thursday, December 16, 2010 / Proposed Rules 78633 

single calendar date for the transfer of 

certain functions from other agencies to 

the Bureau of Consumer Financial 

Protection. Pursuant to Section 1062(a) 

of the Dodd-Frank Act, the Secretary of 

the Treasury has determined that the 

designated transfer date shall be July 21, 

2011. See 75 FR 57252 (Sept. 20, 2010). 

Accordingly, because Section 1100E 

will become effective on July 21, 2011, 

the Board intends to make the 

amendments to Regulation M effective 

on that date. 

Comment Period 

The new threshold for exempt 

consumer leases in the CLA goes into 

effect on July 21, 2011. Accordingly, the 

Board must issue the final rule 

implementing the new threshold 

sufficiently in advance of July 21, 2011 

to permit lessors to make the necessary 

changes to bring their systems and 

practices into compliance. To ensure 

that the Board has adequate time to 

analyze the comments received on the 

proposed rule, the Board is requiring 

that those comments be submitted by 

the later of February 1, 2011 or 30 days 

after publication of the proposal in the 

Federal Register (although comments 

on the Board’s Paperwork Reduction 

Act analysis are not due until 60 days 

after publication). Because the proposal 

is narrow in scope, the Board believes 

that interested parties will have 

sufficient time to review the proposed 

rule and prepare their comments. 

II. Statutory Authority 

The CLA authorizes the Board to 

prescribe regulations to update and 

clarify the requirements and definitions 

applicable to lease disclosures and 

contracts, and any other issues 

specifically related to consumer leasing, 

to the extent that the Board determines 

such action to be necessary to carry out 

the CLA, to prevent circumvention, or to 

facilitate compliance. 15 U.S.C. 

1667f(a). The CLA also provides that 

any regulations prescribed by the Board 

may contain classifications and 

differentiations, and may provide for 

adjustments and exceptions for any 

class of transactions, as the Board 

considers appropriate. Id. In addition, 

the CLA is a part of TILA, which grants 

similar authority to the Board. See 15 

U.S.C. 1604(a) and (f). For the reasons 

discussed below, the Board believes it is 

necessary and appropriate to implement 

Section 1100E of the Dodd-Frank Act by 

revising Regulation M to effectuate the 

purposes of the CLA and TILA, to 

prevent circumvention, and to facilitate 

compliance. 

III. Section-by-Section Analysis 

Section 213.2—Definitions 

2(e) Consumer Lease 

Section 213.2(e) implements the 

CLA’s definition of consumer lease. 

Currently, § 213(e)(1) defines ‘‘consumer 

lease’’ as ‘‘a contract in the form of a 

bailment or lease for the use of personal 

property by a natural person primarily 

for personal, family, or household 

purposes, for a period exceeding four 

months and for a total contractual 

obligation not exceeding $25,000, 

whether or not the lessee has the option 

to purchase or otherwise become the 

owner of the property at the expiration 

of the lease.’’ As discussed in existing 

comment 2(e)–3, the total contractual 

obligation under a lease includes the 

total of payments as well as nonrefundable amounts the lessee is 

contractually obligated to pay to the 

lessor. However, comment 2(e)–3 also 

clarifies that residual value amounts, 

purchase-option prices, and amounts 

collected by the lessor but paid to a 

third party (such as taxes, licenses, and 

registration fees) are excluded from the 

total contractual amount. 

In addition to increasing the threshold 

for an exemption from $25,000 to 

$50,000 effective July 21, 2011, Section 

1100E of the Dodd-Frank Act provides 

that, beginning in 2012, the $50,000 

threshold will be further increased 

annually to reflect any increases in the 

CPI–W. Accordingly, whether the total 

contractual obligation under a consumer 

lease is sufficient to exempt that lease 

from the CLA will depend on the 

threshold amount in effect when the 

lease was consummated. For that 

reason, the Board is proposing to amend 

§ 213.2(e)(1) to provide that a consumer 

lease is exempt if the total contractual 

obligation exceeds ‘‘the applicable 

threshold amount,’’ which would be 

listed in the official staff commentary. 

The Board would further amend 

§ 213.2(e)(1) to provide that the 

threshold amount will be adjusted 

annually to reflect increases in the CPI– 

W (as applicable). 

The Board would adopt a new 

comment 2(e)–9 to clarify the method 

for determining the applicable threshold 

amount with respect to a particular 

lease. Specifically, this comment would 

clarify that a consumer lease is exempt 

from the requirements of Regulation M 

if the total contractual obligation 

exceeds the threshold amount in effect 

at the time of consummation. 

Proposed comment 2(e)–9 would 

further clarify that the threshold amount 

in effect during a particular period of 

time is the amount stated in the 

comment for that period. The comment 

would also note that the threshold 

amount will be adjusted effective 

January 1 of each year by any annual 

percentage increase in the CPI–W that 

was in effect on the preceding June 1. 

Once the annual percentage increase in 

the CPI–W in effect on June 1 becomes 

available, this comment will be 

amended to provide the threshold 

amount for the upcoming year. This 

approach is consistent with that 

adopted by the Board in other 

regulations that provide for annual 

adjustments based on a Consumer Price 

Index. See, e.g., 12 CFR 226.32(a)(1)(ii) 

and its accompanying commentary. The 

Board believes this approach would 

facilitate compliance by permitting the 

publication of an increased threshold 

amount sufficiently in advance of the 

January 1 effective date. 

In addition, new comment 2(e)–9 

clarifies that 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. This approach is 

consistent with Section 1100E(b) of the 

Dodd-Frank Act, which provides that 

annual CPI–W adjustments should be 

‘‘rounded to the nearest multiple of 

$100, or $1,000, as applicable.’’ The 

Board believes that Congress did not 

intend for an annual CPI–W adjustment 

to be rounded to the nearest $100 in 

some circumstances but to the nearest 

$1,000 in others, which could lead to 

anomalous results. Because $1,000 is 

itself a multiple of $100, the Board 

believes that the proposed commentary 

clarifies the statutory language in a 

manner consistent with the intent of 

Section 1100E. 

Finally, the comment would clarify 

that, if a consumer lease is exempt from 

the requirements of Regulation M 

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 as a result of an increase in the 

CPI–W. Thus, for example, if a lease 

with a total contractual obligation of 

$30,000 was consummated in June 

2010, that lease is exempt based on the 

$25,000 threshold in effect at that time 

and would remain exempt after July 21, 

2011, notwithstanding the increase in 

the threshold to $50,000. Similarly, if a 

lease with a total contractual obligation 


srobinson on DSKHWCL6B1PROD with PROPOSALS
78634 Federal Register / Vol. 75, No. 241 / Thursday, December 16, 2010 / Proposed Rules 

of $55,000 is consummated in August 

2011, that lease would be exempt based 

on the $50,000 threshold in effect at that 

time and would remain exempt even if 

the threshold were subsequently 

increased to $56,000 based on an 

increase in the CPI–W. This approach is 

consistent with § 213.3(e), which 

provides that events that occur after 

consummation of a consumer lease 

generally do not require the lessor to 

provide additional Regulation M 

disclosures. See comment 3(e)–2. The 

Board, however, solicits comment on 

any operational difficulties for open-end 

leases posed by this amendment. 

Section 213.7—Advertising 

7(a) General Rule 

Section 213.7 imposes certain 

requirements on advertisements for 

consumer leases. In order to provide 

guidance regarding the interaction 

between § 213.7 and the definition of 

‘‘consumer lease’’ in § 213.2(e), the 

Board proposes to adopt a new 

comment 7(a)–3. This comment would 

clarify that § 213.7 applies to 

advertisements for consumer leases, as 

defined in § 213.2(e). As discussed 

above, a lease is exempt from the 

requirements of Regulation M 

(including § 213.7) if the total 

contractual obligation exceeds the 

threshold amount in effect at the time of 

consummation. Accordingly, proposed 

comment 7(a)–3 would clarify that 

§ 213.7 does not apply to an 

advertisement for a specific consumer 

lease if the total contractual obligation 

for that lease exceeds the threshold 

amount in effect when the 

advertisement is made. If a lessor 

promotes multiple consumer leases in a 

single advertisement, the entire 

advertisement must comply with § 213.7 

unless all of the advertised leases are 

exempt under § 213.2(e). The comment 

would also provide illustrative 

examples. The Board solicits comment 

on the proposed clarification and 

whether additional examples are 

needed. 

IV. Regulatory Flexibility Act Analysis 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) requires an 

agency to perform an initial and final 

regulatory flexibility analysis on the 

impact a rule is expected to have on 

small entities. However, under section 

605(b) of the RFA, 5 U.S.C. 605(b), the 

regulatory flexibility analysis otherwise 

required under section 604 of the RFA 

is not required if an agency certifies, 

along with a statement providing the 

factual basis for such certification, that 

the rule will not have a significant 

economic impact on a substantial 

number of small entities. Based on its 

initial analysis and for the reasons 

stated below, the Board believes that 

this proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. 

1. Statement of the need for, and 

objectives of, the proposed rule. The 

proposed rule would implement Section 

1100E of the Dodd-Frank Act, which 

increases the total contractual obligation 

necessary to exempt a consumer lease 

from the Consumer Leasing Act (CLA) 

from more than $25,000 to more than 

$50,000, effective July 21, 2010. Section 

1100E also provides that, beginning in 

2012, this amount shall be increased 

annually to reflect any annual 

percentage increase in the Consumer 

Price Index for Urban Wage Earners and 

Clerical Workers (CPI–W). The 

supplementary information above 

describes in detail the reasons, 

objectives, and legal basis for the 

proposed rule. 

2. Small entities affected by the 

proposed rule. Currently, Regulation M 

applies to any person who regularly 

leases, offers to lease, or arranges for the 

lease of personal property primarily for 

personal, family, or household 

purposes, for a period exceeding four 

months, and for a total contractual 

obligation of $25,000 or less. 12 CFR 

213.2(e) and (h). Consistent with 

Section 1100E of the Dodd-Frank Act, 

the proposed rule would, beginning on 

July 21, 2011, apply Regulation M to 

any person who provides consumer 

leases for a total contractual obligation 

of $50,000 or less, adjusted annually to 

reflect increases in the CPI–W. 

Based on 2010 call report data, there 

are no banks with assets of $175 million 

or less that engage in consumer leasing. 

In addition, the Board’s 2005 Finance 

Company Survey indicates that fewer 

than ten small finance companies 

engage in consumer leasing. The Board 

acknowledges, however, that the total 

number of small entities likely to be 

affected by the proposed rule is 

unknown, in part because it is unclear 

how many of the small entities currently 

engaged in consumer leasing offer leases 

with total contractual obligations of 

more than $25,000 but not more than 

$50,000. 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 new 

reporting requirements. However, the 

proposed rule would impose new 

recordkeeping requirements for small 

entities that offer consumer leases with 

total contractual obligations of more 

than $25,000 but not more than $50,000. 

Regulation M requires lessors to retain 

evidence of compliance with its 

provisions (except the advertising 

requirements in § 213.7) for a period of 

not less than two years after the date the 

disclosures are required to be made or 

an action is required to be taken. 12 CFR 

213.8. Thus, the proposed rule would 

require lessors to retain records for new 

consumer leases with total contractual 

obligations not exceeding $50,000, 

adjusted annually to reflect increases in 

the CPI–W. 

The proposed rule would also impose 

new compliance requirements for 

consumer leases with total contractual 

obligations of more than $25,000 but not 

more than $50,000. Specifically, for 

consumer leases subject to Regulation 

M, the lessor must provide certain 

disclosures regarding payments, 

liability, and other terms of the lease 

prior to consummation (§§ 213.3 and 

213.4) and when the availability of 

consumer leases on particular terms is 

advertised (§ 213.7). 

The Board understands that small 

entities that offer consumer leases 

generally have systems in place to 

provide the disclosures required by 

Regulation M and retain records of those 

disclosures, even if some of their leases 

are currently exempt. Thus, while the 

precise costs to small entities to provide 

disclosures and retain records for a 

larger population of leases are difficult 

to predict, the Board does not believe 

that the proposed rule would have a 

significant economic impact on a 

substantial number of small entities. 

However, the Board seeks information 

and comment on any costs, compliance 

requirements, or changes in operating 

procedures arising from the application 

of the proposed rule to small entities. 

4. Other Federal rules. The Board has 

not identified any Federal rules that 

duplicate, overlap, or conflict with the 

proposed revisions to Regulation M. 

5. Significant alternatives to the 

proposed revisions. The proposed rule 

would implement Section 1100E of the 

Dodd-Frank Act, which goes into effect 

on July 21, 2011. As discussed in the 

supplementary information, the 

proposed rule would clarify that, if a 

consumer lease with a total contractual 

obligation exceeding $25,000 is 

consummated prior to July 21, 2011, 

that lease remains exempt, 

notwithstanding subsequent increases 

in the threshold amount. The Board 

welcomes comment on any significant 

alternatives, consistent with Section 

1100E of the Dodd-Frank Act, which 

would minimize the impact of the 

proposed rule on small entities. 


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2Federal Financial Institutions Examination 

Council Consolidated Reports of Condition and 

Income (Call Reports) (FFIEC 031 & 041; OMB No. 

7100–0036), Schedule RC–C, data item 10.a—Leases 

to individuals for household, family, and other 

personal expenditures. 

3Appendix B—Federal Enforcement Agencies— 

of Regulation M lists those Federal agencies that 

enforce the regulation for particular classes of 

business. The Federal financial agencies other than 

the Federal Reserve include: the Office of the 

Comptroller of the Currency (OCC), the Federal 

Deposit Insurance Corporation (FDIC), the Office of 

Thrift Supervision (OTS), and the National Credit 

Union Administration (NCUA). The Federal nonfinancial agencies include: the Department of 

Transportation, the Grain Inspection, Packers, and 

Stockyards Administration (Department of 

Agriculture), the Farm Credit Administration, and 

the Federal Trade Commission. 

4Estimate is based on September 30, 2010, 

consumer lease data filed by depository institutions 

in their reports of condition and income: the 

commercial bank Call Report (FFIEC 031 & 041) 

(Federal Reserve OMB No. 7100–0036), (OCC OMB 

No. 1557–0081), and (FDIC OMB No. 3064–0052); 

the thrift institution Thrift Financial Report (TFR; 

form 1313) (OTS OMB No. 1500–0023); and the 

credit union NCUA Call Reports (form 5300) 

(NCUA OMB No. 3133–0004). 

V. Paperwork Reduction Act Analysis 

In accordance with the Paperwork 

Reduction Act (PRA) of 1995 (44 U.S.C. 

3506; 5 CFR Part 1320 Appendix A.1), 

the Board reviewed the proposed rule 

under the authority delegated to the 

Board by the Office of Management and 

Budget (OMB). In addition, as permitted 

by the PRA, the Board proposes to 

extend for three years the current 

recordkeeping and disclosure 

requirements in connection with 

Regulation M. The collection of 

information that is required by this rule 

is found in 12 CFR Part 213. The Board 

may not conduct or sponsor, and an 

organization is not required to respond 

to, this information collection unless it 

displays a currently valid OMB control 

number. The OMB control number is 

7100–0202. 

This information collection is 

required to provide benefits for 

consumers and is mandatory (15 U.S.C. 

1601 et seq.). The respondents/ 

recordkeepers are lessors subject to 

Regulation M, including for-profit 

financial institutions and small 

businesses. Sections 105(a) and 187 of 

TILA (15 U.S.C. 1604(a) and 1667f) 

authorize the Board to issue regulations 

to carry out the provisions of the CLA. 

The CLA and Regulation M are intended 

to provide consumers with meaningful 

disclosures about the costs and terms of 

leases for personal property. The 

disclosures enable consumers to 

compare the terms for a particular lease 

with those for other leases and, when 

appropriate, to compare lease terms 

with those for credit transactions. The 

act and regulation also contain rules 

about advertising consumer leases. The 

information collection pursuant to 

Regulation M is triggered by specific 

events. All disclosures must be 

provided to the lessee prior to the 

consummation of the lease and when 

the availability of consumer leases on 

particular terms is advertised. This 

information collection is mandatory. 

Since the Board does not collect any 

information, no issue of confidentiality 

normally arises. However, in the event 

the Board were to retain records during 

the course of an examination, the 

information may be kept confidential 

pursuant to section (b)(8) of the 

Freedom of Information Act (5 U.S.C. 

522 (b)(8)). 

Regulation M applies to all types of 

lessors of personal property. The Board 

accounts for the paperwork burden 

associated with the regulation only for 

Board-supervised institutions. 

Appendix B of Regulation M defines the 

Board-supervised institutions as: State 

member banks, branches and agencies of 

foreign banks (other than Federal 

branches, Federal agencies, and insured 

state branches of foreign banks), 

commercial lending companies owned 

or controlled by foreign banks, and 

organizations operating under section 

25 or 25A of the Federal Reserve Act. 

Other Federal agencies account for the 

paperwork burden on other lessors for 

which they have administrative 

enforcement authority. 

To ease the compliance cost 

(particularly for small entities) model 

forms are appended to the regulation. 

Lessors are required to retain evidence 

of compliance for 24 months, but the 

regulation does not specify types of 

records that must be retained. 

The current annual burden to comply 

with the provisions of Regulation M is 

estimated to be 2 hours for each of the 

4 State member banks 2 that engage in 

consumer leasing. Thus, the current 

total annual burden for all respondents 

is 8 hours. 

The Board estimates that the proposed 

rule would impose a one-time increase 

in the total annual burden under 

Regulation M. The 4 respondents would 

take, on average, 40 hours (one business 

week) to update their systems to comply 

with the proposed requirements. This 

one-time revision would increase the 

total burden for all 4 respondents by 160 

hours. On a continuing basis, the Board 

estimates that the 4 respondents would 

each take, on average, an additional 8 

hours (one business day) annually to 

comply with the requirements, which 

would increase the ongoing total annual 

burden for all 4 respondents by 32 

hours. Therefore, the total annual 

burden for all respondents is estimated 

to increase by 192 hours (from 8 to 200 

hours) during the first year after a final 

rule is adopted. Thereafter, the ongoing 

total annual burden would be 40 hours. 

The total burden increase represents 

averages for all respondents regulated 

by the Board. The Board expects that the 

amount of time required to implement 

each of the proposed changes for a given 

financial institution or entity may vary 

based on the size and complexity of the 

respondent. 

The other Federal financial agencies 

are responsible for estimating and 

reporting to OMB the total paperwork 

burden for the institutions for which 

they have administrative enforcement 

authority.3 They may, but are not 

required to, use the Board’s burden 

estimates. There are approximately 

16,200 depository institutions of which 

the Board estimates that 58 depository 

institutions 4 would be affected by this 

collection of information and 

considered respondents for purposes of 

the PRA. Using the Board’s method, the 

total estimated annual burden for all 

financial institutions subject to 

Regulation M is currently approximately 

116 hours. The proposed rule would 

impose a one-time increase in the 

estimated annual burden for the 

estimated 58 institutions thought to 

engage in consumer leasing by a total of 

2,320 hours. On a continuing basis, the 

proposed rule would impose an increase 

in the estimated annual burden by a 

total of 464 hours. Thus, the total 

annual burden for the 58 institutions is 

estimated to increase by 2,784 hours 

(from 116 to 2,900 hours) during the 

first year after a final rule is adopted. 

Thereafter, the ongoing total annual 

burden would be 580 hours. The above 

estimates represent an average across all 

respondents and reflect variations 

between institutions based on their size, 

complexity, and practices. In addition, 

other institutions covered by Regulation 

M, such as retailers and finance 

companies potentially are affected by 

this collection of information, and thus 

are also respondents for purposes of the 

PRA. 

Comments are invited on: (1) Whether 

the proposed collection of information 

is necessary for the proper performance 

of the Board’s functions, including 

whether the information has practical 

utility; (2) the accuracy of the Board’s 

estimate of the burden of the proposed 

information collection, including the 

cost of compliance; (3) ways to enhance 

the quality, utility, and clarity of the 

information to be collected; and (4) 

ways to minimize the burden of 

information collection on respondents, 

including through the use of automated 


srobinson on DSKHWCL6B1PROD with PROPOSALS
78636 Federal Register / Vol. 75, No. 241 / Thursday, December 16, 2010 / Proposed Rules 

collection techniques or other forms of 

information technology. Comments on 

the collection of information should be 

sent to Cynthia Ayouch, Acting Federal 

Reserve Clearance Officer, Division of 

Research and Statistics, Mail Stop 95–A, 

Board of Governors of the Federal 

Reserve System, Washington, DC 20551, 

with copies of such comments sent to 

the Office of Management and Budget, 

Paperwork Reduction Project (7100– 

0202), Washington, DC 20503. 

List of Subjects in 12 CFR Part 213 

Advertising, Federal Reserve System, 

Reporting and recordkeeping 

requirements, Truth in lending. 

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) 

1. The authority citation for part 213 

is revised to read as follows: 

Authority: 15 U.S.C. 1604 and 1667f; 

flPub. L. 111–203 § 1100E, 124 Stat. 1376fi. 

2. Section 213.2(e)(1) is revised to 

read as follows: 

§ 213.2 Definitions. 

* * * * * 

(e)(1) Consumer lease means a 

contract in the form of a bailment or 

lease for the use of personal property by 

a natural person primarily for personal, 

family, or household purposes, for a 

period exceeding four months and for a 

total contractual obligation not 

exceeding flthe applicable threshold 

amountfi [$25,000], whether or not the 

lessee has the option to purchase or 

otherwise become the owner of the 

property at the expiration of the lease. 

flFor purposes of this paragraph, the 

threshold amount is adjusted annually 

to reflect increases in the Consumer 

Price Index for Urban Wage Earners and 

Clerical Workers, as applicable. See the 

official staff commentary to this 

paragraph for the threshold amount 

applicable to a specific consumer 

lease.fi Unless the context indicates 

otherwise, in this part ‘‘lease’’ means 

‘‘consumer lease.’’ 

* * * * * 

3. In Supplement I to Part 213: 

A. Under Section 213.2—Definitions, 

under 2(e) Consumer Lease, paragraph 

9. is added; and 

B. Under Section 213.7—Advertising, 

under 7(a) General Rule, paragraph 3. is 

added to read as follows: 

Supplement I to Part 213—Official Staff 

Commentary to Regulation M 

* * * * * 

Section 213.2—Definitions 

* * * * * 

2(e) Consumer Lease. 

* * * * * 

fl9. 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 below 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. This comment 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 as a result of an increase 

in the CPI–W. 

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.fi 

* * * * * 

Section 213.7—Advertising 

7(a) General Rule. 

* * * * * 

fl3. Total contractual obligation of 

advertised lease. Section 213.7 applies to 

advertisements for consumer leases, as 

defined in § 213.2(e). Under § 213.2(e), 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. See comment 2(e)–9. 

Accordingly, § 213.7 does not apply to an 

advertisement for a specific consumer lease 

if the total contractual obligation for that 

lease exceeds the threshold amount in effect 

when the advertisement is made. If a lessor 

promotes multiple consumer leases in a 

single advertisement, the entire 

advertisement must comply with § 213.7 

unless all of the advertised leases are exempt 

under § 213.2(e). For example: 

i. Assume that, in an advertisement, a 

lessor states that certain terms apply to a 

consumer lease for a specific automobile. The 

total contractual obligation of the advertised 

lease exceeds the threshold amount in effect 

when the advertisement is made. Although 

the advertisement does not refer to any other 

lease, some or all of the advertised terms for 

the exempt lease also apply to other leases 

offered by the lessor with total contractual 

obligations that do not exceed the applicable 

threshold amount. The advertisement is not 

required to comply with § 213.7 because it 

refers only to an exempt lease. 

ii. Assume that, in an advertisement, a 

lessor states certain terms (such as the 

amount due at lease signing) that will apply 

to consumer leases for automobiles of a 

particular brand. However, the advertisement 

does not refer to a specific lease. The total 

contractual obligations of the leases for some 

of the automobiles will exceed the threshold 

amount in effect when the advertisement is 

made, but the total contractual obligations of 

the leases for other automobiles will not 

exceed the threshold. The entire 

advertisement must comply with § 213.7 

because it refers to terms for consumer leases 

that are not exempt. 

iii. Assume that, in a single advertisement, 

a lessor states that certain terms apply to 

consumer leases for two different 

automobiles. The total contractual obligation 

of the lease for the first automobile exceeds 

the threshold amount in effect when the 

advertisement is made, but the total 

contractual obligation of the lease for the 

second automobile does not exceed the 

threshold. The entire advertisement must 

comply with § 213.7 because it refers to a 

consumer lease that is not exempt.fi 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, December 10, 2010. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. 2010–31530 Filed 12–15–10; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 226 

[Regulation Z; Docket No. R–1399] 

RIN 7100–AD59 

Truth in Lending 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: Effective July 21, 2011, the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act) amends the Truth in Lending Act 

(TILA) by increasing the threshold for 

exempt consumer credit transactions 

from $25,000 to $50,000. In addition, 

the Dodd-Frank Act provides that, on or 

after December 31, 2011, this threshold 

must be adjusted annually by any 

annual percentage increase in the 

Consumer Price Index for Urban Wage 


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