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

66748 

Vol. 77, No. 216 

Wednesday, November 7, 2012 

1Public Law 111–24, 123 Stat. 1734 (2009). 

2 15 U.S.C. 1665e. 

3 15 U.S.C. 1637(c)(8)(A). 

4 15 U.S.C. 1637(c)(8)(B). 

5See 75 FR 7658, 7719–7724, 7818–7819, 7900– 

7901 (Feb. 22, 2010). 

6 Id. at 7818. 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1026 

[Docket No. CFPB–2012–0039] 

RIN 3170–AA28 

Truth in Lending (Regulation Z) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

proposing to amend Regulation Z, 

which implements the Truth in Lending 

Act (TILA), and the official 

interpretation to the regulation, which 

interprets the requirements of 

Regulation Z. Regulation Z generally 

prohibits a card issuer from opening a 

credit card account for a consumer, or 

increasing the credit limit applicable to 

a credit card account, unless the card 

issuer considers the consumer’s ability 

to make the required payments under 

the terms of such account. Regulation Z 

currently requires that issuers consider 

the consumer’s independent ability to 

pay, regardless of the consumer’s age; in 

contrast, TILA expressly requires 

consideration of an independent ability 

to pay only for applicants who are 

under the age of 21. The Bureau 

requests comment on proposed 

amendments that would remove the 

independent ability-to-pay requirement 

for consumers who are 21 and older, 

and permit issuers to consider income 

to which such consumers have a 

reasonable expectation of access. 

DATES: Comments must be received on 

or before January 7, 2013. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2012– 

0039 or Regulatory Identification 

Number (RIN) 3170–AA28, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail/Hand Delivery/Courier: 

Monica Jackson, Office of the Executive 

Secretary, Bureau of Consumer 

Financial Protection, 1700 G Street NW., 

Washington, DC 20552. 

All submissions must include the 

agency name and docket number or RIN 

for this rulemaking. 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 1700 G Street 

NW., Washington, DC 20552, 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 calling (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: 

Andrea Edmonds, Senior Counsel, 

Office of Regulations, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20552, at 

(202) 435–7000. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Credit Card Accountability 

Responsibility and Disclosure Act of 

2009 (Credit Card Act) was signed into 

law on May 22, 2009.1 The Credit Card 

Act primarily amended the Truth in 

Lending Act (TILA) and instituted new 

substantive and disclosure requirements 

to establish fair and transparent 

practices for open-end consumer credit 

plans. 

The Credit Card Act added TILA 

section150 which states that ‘‘[a] card 

issuer may not open any credit card 

account for any consumer under an 

open end consumer credit plan, or 

increase any credit limit applicable to 

such account, unless the card issuer 

considers the ability of the consumer to 

make the required payments under the 

terms of such account.’’ 2 The Credit 

Card Act also added TILA section 

127(c)(8), which applies special 

requirements for consumers under the 

age of 21. Section 127(c)(8)(A) provides 

that ‘‘[n]o credit card may be issued to, 

or open end consumer credit plan 

established by or on behalf of, a 

consumer who has not attained the age 

of 21, unless the consumer has 

submitted a written application to the 

card issuer’’ that meets certain specific 

requirements.3 Section 127(c)(8)(B) sets 

forth those requirements and provides 

that ‘‘an application to open a credit 

card account by a consumer who has 

not attained the age of 21 as of the date 

of submission of the application shall 

require * * * (i) the signature of a 

cosigner, including the parent, legal 

guardian, spouse, or any other 

individual who has attained the age of 

21 having a means to repay debts 

incurred by the consumer in connection 

with the account, indicating joint 

liability for debts incurred by the 

consumer in connection with the 

account before the consumer has 

attained the age of 21; or * * * (ii) 

submission by the consumer of financial 

information, including through an 

application, indicating an independent 

means of repaying any obligation arising 

from the proposed extension of credit in 

connection with the account.’’ 4

On January 12, 2010, the Board of 

Governors of the Federal Reserve 

System (Board) issued a final rule 

(January 2010 Final Rule) implementing 

new TILA Sections 150 and 127(c)(8) in 

a new 12 CFR 226.51.5 The general rule 

in § 226.51(a) provided, in part, that ‘‘[a] 

card issuer must not open a credit card 

account for a consumer under an openend (not home-secured) consumer credit 

plan, or increase any limit applicable to 

such account, unless the card issuer 

considers the ability of the consumer to 

make the required minimum periodic 

payments under the terms of the 

account based on the consumer’s 

income or assets and current 

obligations.’’ 6 Consistent with the 

statute, § 226.51(b) set forth a special 

rule for consumers who are less than 21 

years old and provided, in part, that a 

card issuer may not open a credit card 

account for a consumer less than 21 

years old unless the consumer has 

submitted a written application and the 

card issuer has either: (i) Financial 


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7 Id. 

8 76 FR 22948, 22974–22977 (Apr. 25, 2011). The 

Board proposed this provision for comment in 

November 2010. 75 FR 67458, 67473–67475 (Nov. 

2, 2010). 

9 76 FR 22948, 23020–23021. 

10 Id. at 22948. 

11Public Law 111–203, 124 Stat. 1376 (2010). 

12 76 FR 79768 (Dec. 22, 2011). 

13Accordingly, the provision addressed in this 

proposal is cited as 12 CFR 1026.51. 14See, e.g., Written Statement of Ashley Boyd, 

MomsRising, U.S. House Subcommittee on 

Financial Institutions and Consumer Credit Hearing 

on ‘‘An Examination of the Federal Reserve’s Final 

Rule on the CARD Act’s ‘Ability to Repay’ 

Requirement’’ (June 6, 2012), available at http:// 

financialservices.house.gov/uploadedfiles/hhrg112-ba15-wstate-aboyd-20120606.pdf; Letter from 

Representatives Maloney, Slaughter, Bachus, and 

Frank to Raj Date (December 5, 2011), available at 

http://maloney.house.gov/press-release/repsmaloney-slaughter-bachus-and-frank-call-cfpbstudy-impact-credit-card-act%E2%80%99s-. 

15Public Law 111–203, 124 Stat. 1376 (2010), 

section 1061(a)(1). Effective on the designated 

transfer date, the Bureau was also granted ‘‘all 

powers and duties’’ vested in each of the Federal 

agencies, relating to the consumer financial 

protection functions, on the day before the 

designated transfer date. Id. section 1061(b)(1). 

16Public Law. 111–203, section 1002(14) 

(defining ‘‘Federal consumer financial law’’ to 

include the ‘‘enumerated consumer laws’’); id. 

section 1002(12) (defining ‘‘enumerated consumer 

laws’’ to include TILA). 

17Public Law 111–203, section 1100A(2); 15 

U.S.C. 1604(a). 

18 Id. 

19The Bureau notes that several comments on its 

notice regarding streamlining of inherited 

regulations (76 FR 75825 (Dec. 5, 2011)) discussed 

aspects of § 1026.51 that are not being addressed in 

this proposal. The Bureau is continuing to consider 

comments on other aspects of § 1026.51; 

accordingly, commenters on this proposal should 

limit their comments to the amendments being 

specifically proposed herein by the Bureau. 

information indicating the consumer 

has an independent ability to make the 

required minimum periodic payments 

on the proposed extension of credit in 

connection with the account; or (ii) a 

signed agreement of a cosigner, 

guarantor, or joint applicant that meets 

certain conditions.7 Accordingly, 

consistent with the statute, the Board’s 

rule required that consumers under 21 

years of age demonstrate an 

independent ability to pay, while the 

general rule applicable to consumers 21 

and over did not impose a similar 

independence requirement. The Board’s 

rule became effective on February 22, 

2010. 

On March 18, 2011, the Board issued 

a final rule amending § 226.51(a) to 

apply the independent ability-to-pay 

requirement to all consumers, regardless 

of age (March 2011 Final Rule).8 The 

Board adopted this change, in part, in 

response to concerns regarding card 

issuers prompting applicants to provide 

‘‘household income’’ on credit card 

applications. To address this specific 

concern, in addition to adopting an 

independent ability-to-pay requirement 

for consumers who are age 21 and older, 

the Board clarified in amended 

comment 51(a)(1)–4.iii that 

consideration of information regarding a 

consumer’s household income does not 

by itself satisfy the requirement in 

§ 226.51(a) to consider the consumer’s 

independent ability to pay. The Board 

stated that in its view it would be 

inconsistent with the language and 

intent of section 150 of TILA to permit 

card issuers to establish a consumer’s 

ability to pay based on the income or 

assets of individuals who are not 

responsible for making payments on the 

account.9 The Board’s amendments to 

§ 226.51 became effective on October 1, 

2011.10

Rulemaking authority for sections 150 

and 127(c)(8) of TILA transferred to the 

Bureau on July 21, 2011, pursuant to the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act).11 On December 22, 2011, the 

Bureau issued an interim final rule to 

reflect its assumption of rulemaking 

authority over Regulation Z.12 The 

interim final rule made only technical 

changes to Regulation Z, such as noting 

the Bureau’s authority and renumbering 

Regulation Z as 12 CFR Part 1026.13

Since the Bureau’s assumption of 

responsibility for TILA and Regulation 

Z, members of Congress and others have 

expressed concerns about § 1026.51 and 

the implementation of the ability-to-pay 

provisions of the Credit Card Act. In 

particular, they objected to the Board’s 

extension of the ‘‘independent’’ abilityto-pay standard in section 127(c)(8) of 

TILA to consumers who are 21 or older, 

and expressed specific concerns about 

the impact of the Board’s March 2011 

Final Rule on the ability of spouses and 

partners who do not work outside the 

home to obtain credit card accounts. 

These groups urged the Bureau to 

further study or reconsider the 

application of the ‘‘independent’’ 

standard set forth in section 127(c)(8) of 

TILA—which, they noted, the statute 

applies only to consumers who are 

under 21—more generally to consumers 

who are 21 and older.14 As discussed 

further elsewhere in this Federal 

Register notice, the Bureau believes that 

the most appropriate reading of sections 

150 and 127(c)(8) is that the 

‘‘independent’’ ability-to-pay standard 

set forth in section 127(c)(8) was 

intended to apply only to consumers 

who are under the age of 21. 

Accordingly, the Bureau believes that 

§ 1026.51(a), as currently in effect, may 

unduly limit the ability of certain 

individuals who are 21 or older to 

obtain credit and is proposing 

amendments to Regulation Z that it 

believes are more consistent with the 

plain language and intent of the Credit 

Card Act. 

II. Legal Authority 

The Bureau is issuing this proposal 

pursuant to its authority under TILA 

and the Dodd-Frank Act. Effective July 

21, 2011, section 1061 of the DoddFrank Act transferred to the Bureau the 

‘‘consumer financial protection 

functions’’ previously vested in certain 

other Federal agencies. The term 

‘‘consumer financial protection 

functions’’ is defined to include ‘‘all 

authority to prescribe rules or issue 

orders or guidelines pursuant to any 

Federal consumer financial law, 

including performing appropriate 

functions to promulgate and review 

such rules, orders, and guidelines.’’ 15

TILA is a Federal consumer financial 

law.16 Accordingly, effective July 21, 

2011, except with respect to persons 

excluded from the Bureau’s rulemaking 

authority by sections 1027 and 1029 of 

the Dodd-Frank Act, the authority of the 

Board to issue regulations pursuant to 

TILA transferred to the Bureau. 

TILA, as amended by the Dodd-Frank 

Act, authorizes the Bureau to ‘‘prescribe 

regulations to carry out the purposes of 

[TILA].’’ 17 These ‘‘regulations may 

contain such additional requirements, 

classifications, differentiations, or other 

provisions, and may provide for such 

adjustments and exceptions for any 

class of transactions,’’ that in the 

Bureau’s judgment are ‘‘necessary or 

proper to effectuate the purposes of 

[TILA], to prevent circumvention or 

evasion thereof, or to facilitate 

compliance therewith.’’ 18

III. Summary of the Proposed Rule 

Section 1026.51 Ability To Pay 

Overview 

The Bureau is proposing to amend 12 

CFR 1026.51 and the official 

interpretation to the regulation in order 

to address concerns that, in light of the 

statutory framework established by 

sections 150 and 127(c)(8) of TILA, 

current § 1026.51(a) may be unduly 

limiting the ability of certain 

individuals 21 or older, including 

spouses or partners who do not work 

outside the home, to obtain credit.19

51(a) General Rule 

Section 1026.51(a) sets forth the 

general ability-to-pay rule that 


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20Section 127(c)(8) of TILA, which sets forth a 

special rule for consumers who have not attained 

the age of 21, is implemented in § 1026.51(b) of 

Regulation Z. 

21 76 FR 22948, 22976. 

22 Id. 

23The Bureau notes that section 127(c)(8)(B) of 

TILA itself also sets forth two different ability-topay standards, depending on the age of the 

individual; the Bureau believes that this further 

suggests that Congress did not intend to apply an 

independent ability-to-pay requirement to 

individuals who are 21 or older. Section 

127(c)(8)(B)(i) sets forth the standard that applies to 

an individual age 21or older who is serving as a 

cosigner or otherwise assuming liability on an 

account being opened by a consumer who is under 

21. Section 127(c)(8)(B)(i) states that such over-21 

cosigner or similar party must ‘‘hav[e] a means to 

repay debts incurred by the consumer in connection 

with the account.’’ In contrast, as discussed above, 

section 127(c)(8)(B)(ii) requires the under-21 

consumer to submit financial information 

‘‘indicating an independent means of repaying any 

obligation arising from the proposed extension of 

credit in connection with the account.’’ 

24See 76 FR 22975. 

25See id. 

implements section 150 of TILA.20

Currently, § 1026.51(a)(1)(i) provides 

that a card issuer must not open a credit 

card account for a consumer under an 

open-end (not home-secured) consumer 

credit plan, or increase any limit 

applicable to such account, unless the 

card issuer considers the consumer’s 

independent ability to make the 

required minimum periodic payments 

under the terms of the account based on 

the consumer’s income or assets and 

current obligations. Section 

1026.51(a)(1)(ii) further provides that 

card issuers must establish and 

maintain reasonable written policies 

and procedures to consider a 

consumer’s independent income or 

assets and current obligations, and that 

such policies and procedures must 

include consideration of at least one of: 

the ratio of debt obligations to income; 

the ratio of debt obligations to assets; or 

the income the consumer will have after 

paying debt obligations. Finally, 

§ 1026.51(a)(1)(ii) states that it would be 

unreasonable for a card issuer to not 

review any information about a 

consumer’s income, assets, or current 

obligations, or to issue a credit card to 

a consumer who does not have any 

independent income or assets. 

Comments 51(a)(1)(i)–1 through 

51(a)(1)(i)–6 set forth additional 

guidance on compliance with the 

requirements of § 1026.51(a)(1). 

The Bureau is proposing to amend 

§ 1026.51(a) in two related respects. 

First, the Bureau is proposing to remove 

all references to an ‘‘independent’’ 

ability to pay from § 1026.51(a)(1) and 

the associated commentary. Second, as 

discussed in more detail below, the 

Bureau is proposing to permit issuers to 

consider income or assets to which an 

applicant who is 21 or older—and thus 

subject to § 1026.51(a) rather than 

§ 1026.51(b)—has a reasonable 

expectation of access. The Bureau’s 

proposal would clarify by examples in 

the commentary those circumstances in 

which the expectation of access is 

deemed to be reasonable or 

unreasonable. 

As discussed above in the Background 

section of this Federal Register notice, 

the independence requirement was 

added to § 1026.51(a), and thus made 

applicable to applicants 21 or older, in 

the Board’s March 2011 Final Rule. In 

the supplementary information to the 

March 2011 Final Rule, the Board 

acknowledged concerns from members 

of Congress, card issuers, trade 

associations and consumers that 

application of an ‘‘independent income’’ 

standard might restrict access to credit 

for consumers who do not work outside 

the home, including certain married 

women.21 Ultimately, however, the 

Board concluded that application of this 

standard would not diminish access to 

credit for this population of married 

women and others who do not work 

outside the home.22 In particular, the 

Board suggested that an issuer’s request 

for ‘‘income’’ would protect credit 

access for these populations. However, 

information made available to the 

Bureau after the rule went into effect 

raises several questions about the 

Board’s assumption in this respect. 

Specifically, the Bureau has become 

aware that several issuers have denied 

card applications from otherwise 

creditworthy individuals based on the 

applicant’s stated income. Credit bureau 

data, including data regarding payment 

history and size of payment obligations, 

suggest that some of these applicants 

had demonstrable access to funding 

sources. Although the Bureau does not 

have direct evidence of precisely who 

the unsuccessful applicants are, indirect 

evidence suggests a meaningful 

proportion of these denials may have 

involved applicants who do not work 

outside the home but who have a spouse 

or partner who does work outside the 

home. The Bureau bases this conclusion 

on summary data from a number of 

issuers on denials of credit card 

applications from otherwise 

creditworthy individuals due to the 

applicants’ stated income. 

The Bureau also does not believe that 

section 150 of TILA requires 

consideration of the ‘‘independent’’ 

ability to pay for applicants who are 21 

or older. Section 150 of TILA refers to 

‘‘the ability of the consumer to make the 

required payments under the terms of 

the account’’ and does not expressly 

include an independence requirement. 

In contrast, section 127(c)(8)(B)(ii) of 

TILA, which sets forth analogous 

requirements that apply to consumers 

who are under 21, expressly requires 

that the consumer demonstrate ‘‘an 

independent means of repaying any 

obligation arising from the proposed 

extension of credit * * *.’’ The Bureau 

believes that the better reading of 

section 150 of TILA, in light of section 

127(c)(8), is that it does not impose an 

independence requirement in the 

ability-to-pay provision for consumers 

who are 21 or older.23

The Bureau notes that the Board came 

to the contrary conclusion that, because 

section 150 of TILA requires card 

issuers to consider ‘‘the ability of the 

consumer to make the required 

payments’’ (emphasis added), it 

indicates that Congress intended card 

issuers to consider only the ability to 

pay of the consumer or consumers who 

are responsible for making payments on 

the account.24 The Board further noted 

that, to the extent that card issuers 

extend credit based on the income of 

persons who are not liable on the 

account, it would be consistent with the 

purposes of section 150 of TILA to 

restrict this practice.25

The Bureau agrees with the Board that 

the application of an overly broad 

standard under section 150 of TILA 

could undermine the purposes of the 

statute by permitting issuers to open 

accounts for consumers based on 

income or assets of other individuals in 

cases where reliance on such income or 

assets would not reasonably reflect the 

consumer’s ability to use such income 

or assets to make payments on a credit 

card debt. Therefore, as discussed 

below, the Bureau is proposing 

additional guidance to clarify when 

reliance on a third party’s income or 

assets would be considered 

unreasonable and, accordingly, could 

not be used to satisfy § 1026.51(a). 

However, the Bureau also believes that 

there are other situations in which it is 

quite reasonable to rely on the income 

or assets of a third party in assessing an 

applicant’s ability to pay. Nothing in the 

text of TILA section 150 suggests that it 

was intended to impose a blanket 

prohibition on extending credit in the 

latter circumstances. Rather, the plain 

language of section 150 of TILA suggests 

that it was intended to impose a more 

flexible standard than the independent 

ability-to-pay requirement of section 

127(c)(8). 

Accordingly, given the likely impact 

of the Board’s March 2011 Final Rule on 


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26The Bureau also is proposing several 

nonsubstantive, technical changes to 

§ 1026.51(a)(1)(ii) for clarity. 

27For simplicity and ease of reference, the 

proposed examples in comment 51(a)(1)–6 address 

scenarios involving two individuals who reside in 

the same household (i.e., the applicant and another 

individual). The examples refer to the second 

member of the applicant’s household as a 

‘‘household member.’’ However, the Bureau notes 

that the proposed rule and commentary also would 

apply to households in which more than two 

individuals reside. 

the access to credit for spouses or 

partners who do not work outside the 

home, and based on the Bureau’s 

statutory interpretation of sections 

127(c)(8) and 150 of TILA, the proposed 

rule would remove references to an 

‘‘independent’’ ability to pay from 

§ 1026.51(a)(1) and the commentary to 

§ 1026.51(a)(1). 

Although the Bureau believes that 

removing the independent ability-to-pay 

requirement from § 1026.51(a)(1) best 

promotes consistency with the statute 

and will help to mitigate unintended 

impacts of the rule on spouses or 

partners who do not work outside the 

home, the Bureau also believes that it is 

important to clarify in more detail the 

income or assets on which a card issuer 

may rely in order to comply with 

§ 1026.51(a). Therefore, the Bureau is 

proposing to amend § 1026.51(a)(1)(ii) to 

clarify that the consideration of a 

consumer’s current income or assets 

may include any income or assets to 

which the consumer has a reasonable 

expectation of access. The Bureau 

believes that the purposes of section 150 

of TILA are best effectuated by placing 

limitations on the income or assets on 

which an issuer may rely when opening 

new credit card accounts or increasing 

credit limits for consumers who are 21 

or older; accordingly, the proposed rule 

and proposed commentary would 

clarify that there are certain sources of 

income or assets on which it would be 

unreasonable for an issuer to rely.26

Current comment 51(a)(1)–4 sets forth 

guidance regarding the consideration of 

income and assets under § 1026.51(a). 

The proposed rule would replace 

current comment 51(a)(1)–4 with new 

comments 51(a)(1)–4 through –6; 

current comments 51(a)(1)–5 and –6 

would be renumbered as comments 

51(a)(1)–7 and –8. Amended comment 

51(a)(1)(i)–4 would generally 

incorporate portions of existing 

comment 51(a)(1)–4.ii, which provides 

guidance on the income or assets that 

may be considered for purposes of 

§ 1026.51(a), with reorganization for 

clarity. In addition, for consistency with 

proposed § 1026.51(a)(1)(ii), proposed 

comment 51(a)(1)–4 would be revised to 

expressly provide that a card issuer may 

consider any income and assets to 

which an applicant, accountholder, 

cosigner, or guarantor who is or will be 

liable for debts incurred on the account 

has a reasonable expectation of access. 

Proposed comment 51(a)(1)–5 would 

generally incorporate portions of 

existing comment 51(a)(1)–4.i and –4.iii, 

which provide guidance on the sources 

of information about a consumer’s 

income and assets on which a card 

issuer may rely. Currently, comment 

51(a)(1)–4.iii provides that if a card 

issuer requests on its application forms 

that applicants provide their income 

without reference to household income 

(such as by requesting ‘‘income’’ or 

‘‘salary’’), the card issuer may rely on 

the information provided by applicants 

to satisfy the requirements of 

§ 1026.51(a). Proposed comment 

51(a)(1)–5.i would similarly provide 

that card issuers may rely on 

information provided by applicants in 

response to a request for ‘‘salary,’’ 

‘‘income,’’ or ‘‘assets.’’ In addition, 

proposed comment 51(a)(1)–5.i would 

clarify that, for purposes of § 1026.51(a), 

card issuers also may rely on 

information provided by applicants in 

response to a request for ‘‘available 

income,’’ ‘‘accessible income,’’ or other 

language requesting that the applicant 

provide information regarding current 

or reasonably expected income and/or 

assets or any income and/or assets to 

which the applicant has a reasonable 

expectation of access. 

The Bureau notes that it is retaining 

in proposed comment 51(a)(1)–5.i 

existing guidance regarding requests by 

issuers for ‘‘household income.’’ 

Proposed comment 51(a)(1)–5.i would 

state that card issuers may not rely 

solely on information provided in 

response to a request for ‘‘household 

income’’; rather, the card issuer would 

need to obtain additional information 

about the applicant’s income (such as by 

contacting the applicant). The Bureau 

believes that it would be inappropriate 

to permit an issuer to rely on the income 

of one or more third parties when 

opening a credit card account for a 

consumer merely because the 

applicant(s) and the other individual(s) 

share a residence. For example, a 

household might consist of two 

roommates who do not have access to 

one another’s income or assets. The 

Bureau believes that in this case it 

generally would be inappropriate to 

permit one roommate to rely on the 

income or assets of the other; however, 

given that they share a household, it is 

possible that one roommate applicant 

might interpret the request for 

‘‘household income’’ to include the 

other roommate’s income. 

Proposed comment 51(a)(1)–6 would 

provide further guidance on when it is 

permissible to consider a household 

member’s income for purposes of 

§ 1026.51(a).27 Proposed comment 

51(a)(1)–6 sets forth four illustrative 

examples regarding the consideration of 

a household member’s income. Three of 

the proposed examples describe 

circumstances in which the Bureau 

believes that the applicant has a 

reasonable expectation of access to a 

household member’s income. Proposed 

comment 51(a)(1)–6.i notes that if a 

household member’s salary is deposited 

into a joint account shared with the 

applicant, an issuer is permitted to 

consider that salary as the applicant’s 

income for purposes of § 1026.51(a). 

Proposed comment 51(a)(1)–6.ii 

assumes that the household member 

regularly transfers a portion of his or her 

salary, which in the first instance is 

directly deposited into an account to 

which the applicant does not have 

access, from that account into a second 

account to which the applicant does 

have access. The applicant then uses the 

account to which he or she has access 

for the payment of household or other 

expenses. An issuer is permitted to 

consider the portion of the salary 

deposited into the account to which the 

applicant has access as the applicant’s 

income for purposes of § 1026.51(a). The 

third example in proposed comment 

51(a)(1)–6.iii assumes that no portion of 

the household member’s salary is 

deposited into an account to which the 

applicant has access. However, the 

household member regularly uses that 

salary to pay for the applicant’s 

expenses. The example clarifies that an 

issuer is permitted to consider the 

household member’s salary as the 

applicant’s income for purposes of 

§ 1026.51(a) because the applicant has a 

reasonable expectation of access to that 

salary. 

The final example in proposed 

comment 51(a)(1)–6.iv describes a 

situation in which the consumer’s 

expectation of access would not be 

deemed to be reasonable. The example 

states that no portion of the household 

member’s salary is deposited into an 

account to which the applicant has 

access, the household member does not 

regularly use that salary to pay for the 

applicant’s expenses, and no Federal or 

State statute or regulation grants the 

applicant an ownership interest in that 

salary. The proposed comment clarifies 

that an issuer would not be permitted to 

consider the household member’s salary 


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as the applicant’s income for purposes 

of § 1026.51(a). 

The Bureau solicits comment on 

whether the examples set forth in 

proposed comment 51(a)(1)–6 are 

appropriate, as well as on whether there 

are additional examples that should be 

included. 

As noted above, the Bureau is merely 

renumbering current comment 51(a)(1)– 

5—which concerns ‘‘current 

obligations’’—as comment 51(a)(1)–7. 

However, the Bureau solicits comment 

on whether additional guidance on this 

subject is appropriate or necessary in 

light of the proposed changes to 

§ 1026.51(a) and the official 

interpretation to that subsection. 

51(b) Rules Affecting Young 

Consumers 

Section 1026.51(b) implements 

section 127(c)(8) of TILA and sets forth 

special ability-to-pay rules for 

consumers who are under the age of 21. 

Section 1026.51(b)(1) currently provides 

that a card issuer may not open a credit 

card account under an open-end (not 

home-secured) consumer credit plan for 

a consumer less than 21 years old unless 

the consumer has submitted a written 

application and the card issuer has 

either: (i) Financial information 

indicating the consumer has an 

independent ability to make the 

required minimum periodic payments 

on the proposed extension of credit in 

connection with the account, consistent 

with § 1026.51(a); or (ii) a signed 

agreement of a cosigner, guarantor, or 

joint applicant, who is at least 21 years 

old, to be either secondarily liable for 

any debt on the account incurred before 

the consumer has attained the age of 21 

or jointly liable with the consumer for 

any debt on the account, and financial 

information indicating that such 

cosigner, guarantor, or joint applicant 

has the independent ability to make the 

required minimum periodic payments 

on such debts, consistent with 

§ 1026.51(a). 

The Bureau is proposing several 

amendments to § 1026.51(b) for 

conformity with the proposed 

amendments to § 1026.51(a) discussed 

above. First, § 1026.51(b)(1)(i) currently 

provides that a card issuer may open a 

credit card account for an underage 

consumer if the card issuer has 

‘‘[f]inancial information indicating the 

consumer has an independent ability to 

make the required minimum periodic 

payments on the proposed extension of 

credit in connection with the account, 

consistent with paragraph (a) of this 

section.’’ (Emphasis added.) As 

discussed above, the proposal would 

remove the independence standard from 

the general ability-to-pay test in 

§ 1026.51(a), but § 1026.51(b) would 

continue to require that underage 

consumers without a cosigner or similar 

party have an independent ability to 

pay, consistent with section 127(c)(8) of 

TILA. Accordingly, the Bureau is 

proposing to delete the phrase 

‘‘consistent with paragraph (a) of this 

section’’ from § 1026.51(b)(1)(i), to 

reflect the difference in ability to pay 

standards for consumers who are 21 or 

older and consumers who are under the 

age of 21. Similarly, the Bureau is 

proposing to delete from 

§ 1026.51(b)(1)(ii)(B) a reference to the 

independent ability to pay of a cosigner, 

guarantor, or joint applicant who is 21 

or older, because proposed § 1026.51(a) 

would require only that consumers who 

are 21 or older have the ability to pay, 

consistent with the guidance set forth in 

§ 1026.51(a), rather than the 

independent ability to pay. 

The Bureau is proposing several new 

comments to specifically explain how 

the independent ability-to-pay standard 

under § 1026.51(b)(1)(i) differs from the 

more general ability-to-pay standard in 

§ 1026.51(a). Proposed comment 

51(b)(1)(i)–1 would generally mirror 

proposed comment 51(a)(1)–4 and 

would address sources of income and 

assets that an issuer may consider, 

except that it would not include 

references to income and assets to 

which the applicant has only a 

reasonable expectation of access. For 

example, proposed comment 51(b)(1)(i)– 

1.i would note that, because 

§ 1026.51(b)(1)(i) requires that the 

consumer who has not attained the age 

of 21 have an independent ability to 

make the required minimum periodic 

payments, the card issuer may only 

consider the current or reasonably 

expected income and assets of an 

applicant or accountholder who is less 

than 21 years old under 

§ 1026.51(b)(1)(i). In addition, proposed 

comment 51(b)(1)(i)–1.i would 

specifically note that the card issuer 

may not consider income or assets to 

which an applicant, accountholder, 

cosigner, or guarantor, in each case who 

is under the age of 21 and is or will be 

liable for debts incurred on the account, 

has only a reasonable expectation of 

access under § 1026.51(b)(1)(i). 

Proposed comment 51(b)(1)(i)–2 

would generally mirror comment 

51(a)(1)–5, with several amendments to 

reflect the different ability-to-pay 

standard for consumers who are under 

21. For example, proposed comment 

51(b)(1)(i)–2.i would state that card 

issuers may rely on information 

provided by applicants in response to a 

request for ‘‘salary,’’ ‘‘income,’’ ‘‘assets,’’ 

or other language requesting that the 

applicant provide information regarding 

current or reasonably expected income 

and/or assets. The proposed comment 

would further provide, however, that 

card issuers may not rely solely on 

information provided in response to a 

request for ‘‘available income,’’ 

‘‘accessible income,’’ or ‘‘household 

income.’’ Instead, the card issuer would 

need to obtain additional information 

about an applicant’s income (such as by 

contacting the applicant). 

The Bureau recognizes that, as a 

practical matter, a card issuer will likely 

use a single application form for all 

consumers, regardless of age. In such 

circumstances, the Bureau notes that 

card issuers might choose to ask a series 

of questions regarding income in order 

to gather enough information to satisfy 

both of the different standards that 

apply to consumers depending on 

whether a particular applicant has 

attained the age of 21. For example, a 

card issuer might provide two separate 

blanks on its application form, one 

prompting applicants to provide their 

‘‘income,’’ and the other prompting 

applicants for ‘‘other accessible 

income.’’ The Bureau solicits comment 

on how, as a practical matter, card 

issuers are likely to prompt consumers 

for income and assets in light of the 

different standards that the proposal 

applies based on a consumer’s age. The 

Bureau further solicits comment on 

whether additional clarification or 

guidance on this issue is necessary in 

the rule or the commentary. 

Proposed comment 51(b)(1)(i)–3 

would set forth the same four factual 

scenarios that are provided in proposed 

comment 51(a)(1)–6 and would explain 

how income and assets would be treated 

in those scenarios pursuant to the 

independent ability-to-pay test in 

§ 1026.51(b). The Bureau solicits 

comment on whether the examples set 

forth in comment 51(b)(1)(i)–3 are 

appropriate, as well as on whether there 

are additional examples that should be 

included. 

Finally, the Bureau is proposing to 

amend existing comment 51(b)(1)–2 and 

to redesignate it as comment 

51(b)(1)(ii)–1. Existing comment 

51(b)(1)–2 states that information 

regarding income and assets that 

satisfies the requirements of § 1026.51(a) 

satisfies the requirements of 

§ 1026.51(b)(1). The Bureau notes that, 

as proposed, income and assets that 

satisfy the requirements of § 1026.51(a) 

might no longer satisfy the requirements 

under § 1026.51(b) for an applicant who 

is under the age of 21; however, income 

and assets that satisfy the requirements 

of § 1026.51(a) would satisfy the abilityVerDate Mar<15>2010 15:18 Nov 06, 2012 Jkt 229001 PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 E:\FR\FM\07NOP1.SGM 07NOP1

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28 15 U.S.C. 1691 et seq.; 12 CFR part 1002. 

29Specifically, section 1022(b)(2)(A) of the DoddFrank Act 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 insured 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. This discussion 

considers the impacts of the proposed rule relative 

to existing law. 

30While proposed § 1026.51(a) would permit a 

card issuer to consider a third party’s income or 

assets to which a consumer has a reasonable 

expectation of access, an issuer also would be 

permitted to continue to consider only the 

applicant’s independent ability to pay. 

31 5 U.S.C. 601 et seq. The Bureau is not aware 

of any governmental units or not-for-profit 

organizations to which the proposal would apply. 

32 5 U.S.C. 601(3). The Bureau may establish an 

alternative definition after consultation with the 

Small Business Administration and an opportunity 

for public comment. Id. 

33 5 U.S.C. 603–605. 

to-pay requirements of 

§ 1026.51(b)(1)(ii)(B) (i.e., those that 

apply to a cosigner, guarantor, or joint 

applicant who is 21 or older). Proposed 

comment 51(b)(1)(ii)–1 would 

accordingly state that information 

regarding income and assets that 

satisfies the requirements of § 1026.51(a) 

also satisfies the requirements of 

§ 1026.51(b)(1)(ii)(B). 

The Bureau notes that one 

consequence of the proposed rule is that 

a spouse or partner who does not work 

outside the home who is 21 or older 

could rely on income to which that 

consumer has a reasonable expectation 

of access. In many cases, spouses or 

partners who do not work outside the 

home who are 21 or older could, 

accordingly, rely on the income of a 

working spouse or partner and could 

open a new credit card account without 

needing a cosigner, guarantor, or joint 

applicant. However, the proposed rule 

would not permit an applicant who is 

under the age of 21 to rely on income 

or assets that are merely accessible; 

accordingly, the Bureau expects that in 

some cases, depending on the specific 

circumstances, nonworking spouses or 

partners under the age of 21 may need 

to apply jointly with their incomeearning spouse or partner or to offer that 

spouse or partner as a guarantor on the 

account. The Bureau believes that this 

outcome is consistent with the 

independent ability-to-pay standard that 

section 127(c)(8) of TILA applies to 

applicants who have not attained the 

age of 21. At the same time, the Bureau 

understands that the proposed rule may 

make it more difficult for spouses or 

partners under 21 who do not work 

outside the home to obtain credit, as 

compared to spouses or partners who 

are 21 or older who do not work outside 

the home. 

The Bureau solicits comment on 

whether additional guidance is 

appropriate or necessary to clarify 

application of the rule to applicants 

under the age of 21, particularly spouses 

or partners who do not work outside the 

home. If such clarification is warranted, 

the Bureau solicits comment on how 

such guidance could be provided in a 

manner consistent with both section 

127(c)(8) of TILA, the Equal Credit 

Opportunity Act, and Regulation B.28

The Bureau notes that a prohibition on 

discrimination based on marital status is 

a long-standing and fundamental tenet 

of fair lending law and, given that 

section 127(c)(8) of TILA imposes a 

more stringent independent ability-topay standard on applicants who are 

under the age of 21 than on those who 

are 21 or older, the Bureau believes it 

would be inappropriate to apply the 

‘‘reasonable expectation of access’’ 

income standard to all applicants who 

are under 21. 

IV. Section 1022(b)(2) of the DoddFrank Act 

In developing the proposed rule, the 

Bureau has considered the potential 

benefits, costs, and impacts,29 and has 

consulted or offered to consult with the 

prudential regulators and the Federal 

Trade Commission, including regarding 

consistency with any prudential, 

market, or systemic objectives 

administered by such agencies. 

The proposal would amend 

§ 1026.51(a) to permit the consideration, 

for applicants 21 or older, of income 

and assets to which the applicant has a 

reasonable expectation of access. 

Currently, § 1026.51(a) requires that 

issuers consider the consumer’s 

independent ability to make the 

required minimum periodic payments 

under the terms of the account, based on 

the consumer’s income or assets. 

The proposal would allow issuers to 

extend credit (either open credit card 

accounts under open end consumer 

credit plans, or increase credit limits 

applicable to such accounts) in 

circumstances where they are currently 

prohibited from doing so, notably in 

response to applications from 

consumers 21 or older that rely on 

income or assets to which the applicant 

only has a reasonable expectation of 

access. Extensions of credit based on the 

consideration of such income or assets 

would likely benefit both covered 

persons (the creditors) and consumers 

(the applicants) since in most 

circumstances, creditors would not 

extend credit, nor would adult 

applicants accept the offer were it not in 

the mutual interest of both parties. 

While in theory certain consumer and 

issuer behaviors could lead to situations 

where consumers enter into credit 

contracts that are harmful to their own 

financial situation, it seems unlikely 

that preventing creditors from extending 

credit in such situations would prevent 

many such cases, while it may prevent 

many mutually beneficial transactions. 

At present, the Bureau does not have 

data with which to quantify the relative 

credit performance of applicants who 

received credit on the basis of income 

or assets to which the applicant had 

only a reasonable expectation of access 

compared to other types of applicants. 

The Bureau seeks data on the 

prevalence of such applications and 

evidence regarding the performance of 

such loans. 

The proposal itself does not impose 

additional compliance costs on covered 

persons since all methods of compliance 

under current law will remain available 

to covered persons if the proposal is 

adopted,30 and a covered person who is 

in compliance with current law need 

not take any additional action if the 

proposal is adopted. 

Finally, the proposed rule would have 

no unique impact on insured depository 

institutions or insured credit unions 

with $10 billion or less in assets as 

described in section 1026 of the DoddFrank Act, nor would the proposed rule 

have a unique impact on rural 

consumers. 

The Bureau requests comments on the 

potential benefits, costs, and impacts of 

the proposal. 

V. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit organizations.31

The RFA defines a ‘‘small business’’ as 

a business that meets the size standard 

developed by the Small Business 

Administration pursuant to the Small 

Business Act.32

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, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities.33

The Bureau also is subject to certain 

additional procedures under the RFA 


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34 5 U.S.C. 609. 

35 44 U.S.C. 3501 et seq. 

36See 75 FR 7658, 7791 (Feb. 22, 2010) for the 

Board’s burden analysis under the Paperwork 

Reduction Act. See also 76 FR 22948, 22996 (Apr. 

25, 2011). 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required.34

An IRFA is not required for the 

proposal because the proposal, if 

adopted, would not have a significant 

economic impact on any small entities. 

The Bureau does not expect the 

proposal to impose costs on covered 

persons. All methods of compliance 

under current law will remain available 

to small entities if the proposal is 

adopted. Thus, a small entity that is in 

compliance with current law need not 

take any additional action if the 

proposal is adopted. 

Accordingly, the undersigned certifies 

that this proposal, if adopted, would not 

have a significant economic impact on 

a substantial number of small entities. 

VI. Paperwork Reduction Act 

This proposal would amend 

Regulation Z, 12 CFR 1026. The 

collections of information related to 

Regulation Z have been previously 

reviewed and approved by the Office of 

Management and Budget (OMB) in 

accordance with the Paperwork 

Reduction Act of 1995 (PRA) 35 and 

assigned OMB Control Number 3170– 

0015. Under the PRA, the Bureau may 

not conduct or sponsor, and a person is 

not required to respond to, an 

information collection unless the 

information collection displays a valid 

control number assigned by OMB. As 

discussed below, the Bureau does not 

believe that this proposed rule would 

impose any new collection of 

information or any increase to the 

previously approved estimated burden 

associated with the information 

collections in Regulation Z. 

If this proposal to amend Regulation 

Z is adopted, card issuers will be 

permitted, but not required, to consider 

additional sources of income and assets 

for purposes of § 1026.51(a), when 

evaluating an application for a new 

credit card account under an open-end 

(not home-secured) consumer credit 

plan. The Bureau believes that any 

burden associated with updating 

compliance under the proposed 

provisions is already accounted for in 

the previously approved burden 

estimates associated with the collection 

in Regulation Z under the Board’s 

January 2010 Final Rule estimates, 

which were incorporated by reference in 

the Board’s March 2011 Final Rule.36

Accordingly, for the reasons stated 

above, the Bureau estimates that there 

would not be an increase in the onetime or ongoing burden to comply with 

the requirements under proposed 

§ 1026.51. 

Although the Bureau does not believe 

that the proposed rule imposes any new 

collection of information or any increase 

to the previously approved estimated 

burden associated with the collections 

in Regulation Z, the Bureau solicits 

comment on the proposed modification 

to § 1026.51 or any other aspect of the 

proposal for purposes of the PRA. 

Comments on the collection of 

information requirements should be 

sent to the Office of Management and 

Budget, Attention: Desk Officer for the 

Consumer Financial Protection Bureau, 

Office of Information and Regulatory 

Affairs, Washington, DC 20503 or via 

the Internet to http:// 

oira_submission@omb.eop.gov, with 

copies to the Bureau at the Consumer 

Financial Protection Bureau (Attention: 

PRA Office), 1700 G Street NW., 

Washington, DC 20552, or by the 

Internet to CFPB_Public_PRA@cfpb.gov. 

All comments will become a matter of 

public record. 

Text of Proposed Revisions 

Certain conventions have been used 

to highlight the proposed changes to the 

text of the regulation and official 

interpretation. New language is shown 

inside flbold-faced arrowsfi, while 

language that would be deleted is set off 

with øbold-faced brackets¿. 

List of Subjects in 12 CFR Part 1026 

Advertising, Consumer protection, 

Credit, Credit unions, Mortgages, 

National banks, Reporting and 

recordkeeping requirements, Savings 

associations, Truth in lending. 

Authority and Issuance 

For the reasons set forth in the 

preamble above, the Bureau proposes to 

amend part 1026 of Chapter X in Title 

12 of the Code of Federal Regulations as 

follows: 

PART 1026—TRUTH IN LENDING 

(REGULATION Z) 

1. The authority citation for part 1026 

continues to read as follows: 

Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 

1601 et seq. 

Subpart G—Special Rules Applicable 

to Credit Card Accounts and Open-End 

Credit Offered to College Students 

2. Section 1026.51 is amended by 

revising paragraphs (a)(1) and (b)(1) as 

follows: 

§ 1026.51 Ability to Pay. 

(a) General rule. (1)(i) Consideration 

of ability to pay. A card issuer must not 

open a credit card account for a 

consumer under an open-end (not 

home-secured) consumer credit plan, or 

increase any credit limit applicable to 

such account, unless the card issuer 

considers the consumer’s 

øindependent¿ ability to make the 

required minimum periodic payments 

under the terms of the account based on 

the consumer’s income or assets and 

flthe consumer’sfi current obligations. 

(ii) Reasonable policies and 

procedures. Card issuers must establish 

and maintain reasonable written 

policies and procedures to consider a 

consumer’s flincome or assets and a 

consumer’s current obligations, which 

may include any income and assets to 

which the consumer has a reasonable 

expectation of accessfi øindependent 

income or assets and current 

obligations¿. Reasonable policies and 

procedures to consider a consumer’s 

øindependent¿ ability to make the 

required payments include the 

consideration of at least one of the 

following: The ratio of debt obligations 

to income; the ratio of debt obligations 

to assets; or the income the consumer 

will have after paying debt obligations. 

It would be unreasonable for a card 

issuer to not review any information 

about a consumer’s flcurrent 

obligations,fi income, flor fi assets ø, 

or current obligations¿, or to issue a 

credit card to a consumer who does not 

have any øindependent¿ income or 

assets. 

* * * * * 

(b) Rules affecting young consumers. 

(1) Applications from young consumers. 

A card issuer may not open a credit card 

account under an open-end (not homesecured) consumer credit plan for a 

consumer less than 21 years old, unless 

the consumer has submitted a written 

application and the card issuer has: 

(i) Financial information indicating 

the consumer has an independent 

ability to make the required minimum 

periodic payments on the proposed 

extension of credit in connection with 

the accountø, consistent with paragraph 

(a) of this section¿; or 

(ii)(A) A signed agreement of a 

cosigner, guarantor, or joint applicant 

who is at least 21 years old to be either 

secondarily liable for any debt on the 

account incurred by the consumer 

before the consumer has attained the age 

of 21 or jointly liable with the consumer 

for any debt on the account; and 

(B) Financial information indicating 

such cosigner, guarantor, or joint 

applicant has the øindependent¿ ability 


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to make the required minimum periodic 

payments on such debts, consistent with 

paragraph (a) of this section. 

(2) Credit line increases for young 

consumers. If a credit card account has 

been opened pursuant to paragraph 

(b)(1)(ii) of this section, no increase in 

the credit limit may be made on such 

account before the consumer attains the 

age of 21 unless the cosigner, guarantor, 

or joint applicant who assumed liability 

at account opening agrees in writing to 

assume liability on the increase. 

3. In Supplement I to part 1026 under 

Section 1026.51 Ability to Pay: 

A. Under subheading 51(a) General 

rule and subheading 51(a)(1)(i)

Consideration of ability to pay: 

i. Paragraphs 1, 2, and 4 are revised. 

ii. Paragraphs 5 and 6 are 

redesignated as paragraphs 7 and 8 

respectively. 

iii. New paragraphs 5 and 6 are 

added. 

B. Under subheading 51(b)(1)

Applications from young consumers: 

i. Paragraph 2 is removed. 

ii. Add subheading Paragraph 

51(b)(1)(i), and paragraphs 1 through 3. 

iii. Add subheading Paragraph 

51(b)(1)(ii) and paragraph 1. 

The revisions and additions read as 

follows: 

Supplement I to Part 1026—Official 

Interpretations 

* * * * * 

Section 1026.51—Ability To Pay 

51(a) General Rule 

51(a)(1) Consideration of Ability To 

Pay 

1. Consideration of additional factors. 

Section 1026.51(a) requires a card issuer 

to consider a consumer’s øindependent¿ 

ability to make the required minimum 

periodic payments under the terms of an 

account based on the consumer’s 

øindependent¿ income or assets and 

current obligations. The card issuer may 

also consider consumer reports, credit 

scores, and other factors, consistent 

with Regulation B (12 CFR part 1002). 

2. Ability to pay as of application or 

consideration of increase. A card issuer 

complies with § 1026.51(a) if it bases its 

determination regarding a consumer’s 

øindependent¿ ability to make the 

required minimum periodic payments 

on the facts and circumstances known 

to the card issuer at the time the 

consumer applies to open the credit 

card account or when the card issuer 

considers increasing the credit line on 

an existing account. 

* * * * * 

fl4. Consideration of income and 

assets. For purposes of § 1026.51(a): 

i. A card issuer may consider any 

current or reasonably expected income 

and assets of the consumer or 

consumers who are applying for a new 

account or will be liable for debts 

incurred on that account, including a 

cosigner or guarantor. Similarly, when a 

card issuer is considering whether to 

increase the credit limit on an existing 

account, the card issuer may consider 

any current or reasonably expected 

income and assets of the consumer or 

consumers who are accountholders, 

cosigners, or guarantors, and are liable 

for debts incurred on that account. A 

card issuer may also consider any 

income and assets to which an 

applicant, accountholder, cosigner, or 

guarantor who is or will be liable for 

debts incurred on the account has a 

reasonable expectation of access. 

ii. Current or reasonably expected 

income includes, for example, current 

or expected salary, wages, bonus pay, 

tips, and commissions. Employment 

may be full-time, part-time, seasonal, 

irregular, military, or self-employment. 

Other sources of income include interest 

or dividends, retirement benefits, public 

assistance, alimony, child support, or 

separate maintenance payments. Assets 

include savings accounts or 

investments. 

iii. Consideration of the income and 

assets of authorized users, household 

members, or other persons who are not 

liable for debts incurred on the account 

does not satisfy the requirement to 

consider the consumer’s income or 

assets, unless the consumer has a 

reasonable expectation of access to such 

income or assets or a Federal or State 

statute or regulation grants a consumer 

who is liable for debts incurred on the 

account an ownership interest in such 

income and assets. 

5. Information regarding income and 

assets. For purposes of § 1026.51(a), a 

card issuer may consider the consumer’s 

income and assets based on the 

following information: 

i. Information provided by the 

consumer in connection with the 

account, including information 

provided by the consumer through the 

application process. For example, card 

issuers may rely on information 

provided by applicants in response to a 

request for ‘‘salary,’’ ‘‘income,’’ ‘‘assets,’’ 

‘‘available income,’’ ‘‘accessible 

income,’’ or other language requesting 

that the applicant provide information 

regarding current or reasonably 

expected income and/or assets or any 

income and/or assets to which the 

applicant has a reasonable expectation 

of access. However, card issuers may 

not rely solely on information provided 

in response to a request for ‘‘household 

income.’’ Instead, the card issuer would 

need to obtain additional information 

about an applicant’s income (such as by 

contacting the applicant). 

ii. Information provided by the 

consumer in connection with any other 

financial relationship the card issuer or 

its affiliates have with the consumer 

(subject to any applicable informationsharing rules). 

iii. Information obtained through 

third parties (subject to any applicable 

information-sharing rules). 

iv. Information obtained through any 

empirically derived, demonstrably and 

statistically sound model that 

reasonably estimates a consumer’s 

income and/or assets, including any 

income and/or assets to which the 

consumer has a reasonable expectation 

of access. 

6. Examples of considering income. 

Assume that an applicant is not 

employed but shares a household with 

another individual (the ‘‘household 

member’’) who is employed. The 

applicant is age 21 or older so 

§ 1026.51(b) does not apply. 

i. If the household member’s salary is 

deposited into a joint account shared 

with the applicant, a card issuer may 

consider that salary to be the applicant’s 

income for purposes of § 1026.51(a). 

ii. The household member’s salary is 

deposited into an account to which the 

applicant does not have access. 

However, the household member 

regularly transfers a portion of that 

salary into an account to which the 

applicant does have access, which the 

applicant uses for the payment of 

household or other expenses. A card 

issuer is permitted to consider the 

portion of the salary deposited into the 

account to which the applicant has 

access as the applicant’s income for 

purposes of § 1026.51(a). 

iii. No portion of the household 

member’s salary is deposited into an 

account to which the applicant has 

access. However, the household member 

regularly uses that salary to pay for the 

applicant’s expenses. A card issuer is 

permitted to consider the household 

member’s salary to be the applicant’s 

income for purposes of § 1026.51(a) 

because the applicant has a reasonable 

expectation of access to that salary. 

iv. No portion of the household 

member’s salary is deposited into an 

account to which the applicant has 

access, the household member does not 

regularly use that salary to pay for the 

applicant’s expenses, and no Federal or 

State statute or regulation grants the 

applicant an ownership interest in that 

salary. A card issuer is not permitted to 

consider the household member’s salary 


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66756 Federal Register / Vol. 77, No. 216 / Wednesday, November 7, 2012 / Proposed Rules 

as the applicant’s income for purposes 

of § 1026.51(a).fi 

ø4. Income and assets. i. Sources of 

information. For purposes of 

§ 1026.51(a), a card issuer may consider 

the consumer’s income and assets based 

on: 

A. Information provided by the 

consumer in connection with the credit 

card account under an open-end (not 

home-secured) consumer credit plan; 

B. Information provided by the 

consumer in connection with any other 

financial relationship the card issuer or 

its affiliates have with the consumer 

(subject to any applicable informationsharing rules); 

C. Information obtained through third 

parties (subject to any applicable 

information-sharing rules); and 

D. Information obtained through any 

empirically derived, demonstrably and 

statistically sound model that 

reasonably estimates a consumer’s 

income and assets. 

ii. Income and assets of persons liable 

for debts incurred on account. For 

purposes of § 1026.51(a), a card issuer 

may consider any current or reasonably 

expected income and assets of the 

consumer or consumers who are 

applying for a new account and will be 

liable for debts incurred on that 

account. Similarly, when a card issuer 

is considering whether to increase the 

credit limit on an existing account, the 

card issuer may consider any current or 

reasonably expected income and assets 

of the consumer or consumers who are 

accountholders and are liable for debts 

incurred on that account. A card issuer 

may also consider any current or 

reasonably expected income and assets 

of a cosigner or guarantor who is or will 

be liable for debts incurred on the 

account. However, a card issuer may not 

use the income and assets of an 

authorized user or other person who is 

not liable for debts incurred on the 

account to satisfy the requirements of 

§ 1026.51, unless a Federal or State 

statute or regulation grants a consumer 

who is liable for debts incurred on the 

account an ownership interest in such 

income and assets. Information about 

current or reasonably expected income 

and assets includes, for example, 

information about current or expected 

salary, wages, bonus pay, tips, and 

commissions. Employment may be fulltime, part-time, seasonal, irregular, 

military, or self-employment. Other 

sources of income could include interest 

or dividends, retirement benefits, public 

assistance, alimony, child support, or 

separate maintenance payments. A card 

issuer may also take into account assets 

such as savings accounts or 

investments. 

iii. Household income and assets. 

Consideration of information regarding 

a consumer’s household income does 

not by itself satisfy the requirement in 

§ 1026.51(a) to consider the consumer’s 

independent ability to pay. For 

example, if a card issuer requests on its 

application forms that applicants 

provide their ‘‘household income,’’ the 

card issuer may not rely solely on the 

information provided by applicants to 

satisfy the requirements of § 1026.51(a). 

Instead, the card issuer would need to 

obtain additional information about an 

applicant’s independent income (such 

as by contacting the applicant). 

However, if a card issuer requests on its 

application forms that applicants 

provide their income without reference 

to household income (such as by 

requesting ‘‘income’’ or ‘‘salary’’), the 

card issuer may rely on the information 

provided by applicants to satisfy the 

requirements of § 1026.51(a).] 

fl7fi ø5¿. Current obligations. A 

card issuer may consider the consumer’s 

current obligations based on 

information provided by the consumer 

or in a consumer report. In evaluating a 

consumer’s current obligations, a card 

issuer need not assume that credit lines 

for other obligations are fully utilized. 

fl8fi ø6¿. Joint applicants and joint 

accountholders. With respect to the 

opening of a joint account for two or 

more consumers or a credit line increase 

on such an account, the card issuer may 

consider the collective ability of all 

persons who are or will be liable for 

debts incurred on the account to make 

the required payments. 

* * * * * 

51(b)(1) Applications From Young 

Consumers 

* * * 

flParagraph 51(b)(1)(i). 

1. Consideration of income and assets 

for young consumers. For purposes of 

§ 1026.51(b)(1)(i): 

i. A card issuer may consider any 

current or reasonably expected income 

and assets of the consumer or 

consumers who are applying for a new 

account or will be liable for debts 

incurred on that account, including a 

cosigner or guarantor. Similarly, when a 

card issuer is considering whether to 

increase the credit limit on an existing 

account, the card issuer may consider 

any current or reasonably expected 

income and assets of the consumer or 

consumers who are accountholders, 

cosigners, or guarantors and are liable 

for debts incurred on that account. 

However, because § 1026.51(b)(1)(i) 

requires that the consumer who has not 

attained the age of 21 have an 

independent ability to make the 

required minimum periodic payments, 

the card issuer may only consider the 

current or reasonably expected income 

and assets of an applicant or 

accountholder who is less than 21 years 

old under § 1026.51(b)(1)(i). The card 

issuer may not consider income or 

assets to which an applicant, 

accountholder, cosigner, or guarantor, in 

each case who is under the age of 21 

and is or will be liable for debts 

incurred on the account, has only a 

reasonable expectation of access under 

§ 1026.51(b)(1)(i). 

ii. Current or reasonably expected 

income includes, for example, current 

or expected salary, wages, bonus pay, 

tips, and commissions. Employment 

may be full-time, part-time, seasonal, 

irregular, military, or self-employment. 

Other sources of income include interest 

or dividends, retirement benefits, public 

assistance, alimony, child support, or 

separate maintenance payments. Assets 

include savings accounts or 

investments. 

iii. Consideration of the income and 

assets of authorized users, household 

members, or other persons who are not 

liable for debts incurred on the account 

does not satisfy the requirement to 

consider the consumer’s income or 

assets, unless a Federal or State statute 

or regulation grants a consumer who is 

liable for debts incurred on the account 

an ownership interest in such income 

and assets. 

2. Information regarding income and 

assets for young consumers. For 

purposes of § 1026.51(b)(1)(i), a card 

issuer may consider the consumer’s 

income and assets based on the 

following information: 

i. Information provided by the 

consumer in connection with the 

account, including information 

provided by the consumer through the 

application process. For example, card 

issuers may rely on information 

provided by applicants in response to a 

request for ‘‘salary,’’ ‘‘income,’’ ‘‘assets,’’ 

or other language requesting that the 

applicant provide information regarding 

current or reasonably expected income 

and/or assets. However, card issuers 

may not rely solely on information 

provided in response to a request for 

‘‘available income,’’ ‘‘accessible 

income,’’ or ‘‘household income.’’ 

Instead, the card issuer would need to 

obtain additional information about an 

applicant’s income (such as by 

contacting the applicant). 

ii. Information provided by the 

consumer in connection with any other 

financial relationship the card issuer or 

its affiliates have with the consumer 

(subject to any applicable informationsharing rules). 


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iii. Information obtained through 

third parties (subject to any applicable 

information-sharing rules). 

iv. Information obtained through any 

empirically derived, demonstrably and 

statistically sound model that 

reasonably estimates a consumer’s 

income and/or assets. 

3. Examples of considering income for 

young consumers. Assume that an 

applicant is not employed but shares a 

household with another individual (the 

‘‘household member’’) who is 

employed. The applicant is under the 

age of 21 so § 1026.51(b) does apply. 

i. If the household member’s salary is 

deposited into a joint account shared 

with the applicant, a card issuer may 

consider that salary to be the applicant’s 

income for purposes of 

§ 1026.51(b)(1)(i). 

ii. The household member’s salary is 

deposited into an account to which the 

applicant does not have access. 

However, the household member 

regularly transfers a portion of that 

salary into an account to which the 

applicant does have access, which the 

applicant uses for the payment of 

household or other expenses. Whether a 

card issuer may consider the portion of 

the salary that is deposited into the 

account to be the applicant’s income for 

purposes of § 1026.51(b)(1)(i) depends 

on whether a Federal or state Statute or 

regulation grants the applicant an 

ownership interest in the account to 

which the applicant has access. 

iii. No portion of the household 

member’s salary is deposited into an 

account to which the applicant has 

access. However, the household member 

regularly uses that salary to pay for the 

applicant’s expenses. A cards issuer 

may not consider the household 

member’s salary as the applicant’s 

income for purposes of § 1026.51(b)(1)(i) 

because the salary is not current or 

reasonably expected income of the 

applicant. 

iv. No portion of the household 

member’s salary is deposited into an 

account to which the applicant has 

access, the household member does not 

regularly use that salary to pay for the 

applicant’s expenses, and no Federal or 

State statute or regulation grants the 

applicant an ownership interest in that 

salary. The card issuer may not consider 

the household member’s salary to be the 

applicant’s income for purposes of 

§ 1026.51(b)(1)(i). 

Paragraph 51(b)(1)(ii) 

1. Financial information. Information 

regarding income and assets that 

satisfies the requirements of § 1026.51(a) 

also satisfies the requirements of 

§ 1026.51(b)(1)(ii)(B) and card issuers 

may rely on the guidance in comments 

51(a)(1)–4, –5, and –6 for purposes of 

determining whether a cosigner, 

guarantor, or joint applicant who is at 

least 21 years old has the ability to make 

the required minimum periodic 

payments in accordance with 

§ 1026.51(b)(1)(ii)(B). [See comment 

51(a)(1)–4.] fi. 

* * * * * 

Dated: October 17, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2012–26008 Filed 11–6–12; 8:45 am] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2012–1161; Directorate 

Identifier 2011–NM–277–AD] 

RIN 2120–AA64 

Airworthiness Directives; The Boeing 

Company Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to supersede an 

existing airworthiness directive (AD) 

that applies to certain The Boeing 

Company Model 737–200, –200C, –300, 

–400 and –500 series airplanes. The 

existing AD currently requires a onetime mid-frequency eddy current 

(MFEC) inspection, a low frequency 

eddy current (LFEC) inspection, and a 

detailed inspection for damage or 

cracking of stringer S–4L and S–4R lap 

joints and stringer clips between body 

station (BS) 540 and BS 727, and followon inspections and repair if necessary. 

Since we issued that AD, we have 

received reports of cracking of the lap 

joint lower row. This proposed AD 

would instead require repetitive 

external eddy current inspections for 

cracking of certain fuselage crown lap 

joints and corrective actions; internal 

eddy current and detailed inspections 

for cracking of certain fuselage crown 

lap joints, and repair if necessary; and 

detailed inspections of certain stringer 

clips, and replacement with new 

stringer clips if necessary. This 

proposed AD would also add airplanes 

to the applicability. We are proposing 

this AD to detect and correct cracking of 

the fuselage lap joints, which could 

result in sudden decompression of the 

airplane. 

DATES: We must receive comments on 

this proposed AD by December 24, 

2012. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE., 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

For service information identified in 

this AD, contact Boeing Commercial 

Airplanes, Attention: Data & Services 

Management, P.O. Box 3707, MC 2H–65, 

Seattle, WA 98124–2207; telephone 

206–544–5000, extension 1; fax 206– 

766–5680; Internet https:// 

www.myboeingfleet.com. You may 

review copies of the referenced service 

information at the FAA, Transport 

Airplane Directorate, 1601 Lind Avenue 

SW., Renton, WA. For information on 

the availability of this material at the 

FAA, call 425–227–1221. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 9 

a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Office 

(phone: 800–647–5527) is in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

FOR FURTHER INFORMATION CONTACT: 

Wayne Lockett, Aerospace Engineer, 

Airframe Branch, ANM–120S, FAA, 

Seattle Aircraft Certification Office, 

1601 Lind Avenue SW., Renton, WA 

98057–3356; phone: 425–917–6447; fax: 

425–917–6590; email: 

wayne.lockett@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposed AD. Send your comments 

to an address listed under the 

ADDRESSES section. Include ‘‘Docket No. 

FAA–2012–1161; Directorate Identifier 

2011–NM–277–AD’’ at the beginning of 


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