Evening star. [volume] (Washington, D.C.) 1854-1972, 1949-06-06
Commissioners
SET New Rules
On Small Loans
Regulations Submitted
To Curb insurance
Buying requirement

Nee aas SrSetst fexAsaktsers TT
small AaAH ces1gAssss wh&A
woaie eliminate tssx excessive
amount q! Insurance Required 1t
borrowers, wxtw as4asN srS - ira
teAaas
Assistant CSsspagagAsss cssxasea
Chester Gray sxsat Ire TvGsaaatsssas
10 THE Comm sSsa0nsss fes tsess Ar~
rsosai elisnAxtng iae study q shs
present rwgalatsans aaeh eegAn
last November APPROXIMATELY hall
anaen public hearings have heen
held.
Mr. Gray SAAd the main tasnx
the new regulations wc0aa %
would he 10 eliminate The practice
es sosse loan companies 81 Fw9uiT~
ms every borrower 10 bay every
conceivable type nt insurance BE-.
fore getting MS loan. T7ps gassaf-
anee. also nod b. The loan eosn-
nAnlss. accounted fef much 81
their pFofitS, he added
Nj Gray e,tna an example
where one loan company agreed ls
lend . man 81 500 bat required
him 10 take nat 80 nueh ,nxsn.
amer thai the premiums alans ran
to $500
Msxinpm Interest Unshaasea.
The pranased geealattsns
specify the type and kind and
quantity Of insurance winch NAV
be required OF the borrower he
fore the loan Is made he added.
The maximum Interest rates
which may he charged hy licensed
lenders sas unchanged In Tire
proposed regulations They are
r. per month for leana up -
5000 and 49, per wear for loans IN
excess Of that amount To charge
these rates the lenders must be
licensed as = small loan company,
New features which will affect
small loan companies u the rrEu-
iations arc adopted by thr com
m,Ssioners include these
A copy Of the policy Of lnsur-
anoe must be delivered by the
licensee 10 the borrower by 20 days
after making the loan. Mr.. oFay
explained that some companies
we're In the habit of retaining the
insurance policy after selling ~
Household Collateral
II the loan of money Ia made
on the collateral security os hoase.
hold furniture and furnishing. iirs
and extended eoserase insurance
for q term net exceeding the term
OF The loan In amount not exceed
Ing the fair market value Of Tire
property at the time the policy
Ia issued may bs required
II the loan of money 10 MADE
on the collateral security at Q
vehicle, $50, SIS OF 400 dedaetihls
collision and also Are and theft
tare comprehensive IN lieu At IRE
and theft insurance NAV be re-
auired for n term not exceeding
the term OF the loan.
II there Is no collateral security
for q loan OF money. reducing
form Of term life insurance on the
life Of the borrower. in amount
not exceeding the actual amount
OF the loan and for o term not
exceeding the term OF the loan
may be required,
In no case shall life insurance
be required In cases tn which prop.
erty Ia accepted for collateral ~.
curity OF q loan Of money.
The proposed regulations also
give In detail what each lender
must do when . loan Ia made,
Details 10 Ne Ineiuaed.
These include delivery 70 each
borrower OF the time the loan 10
made. a statement showing In
clear and distinct terms" the as-
tual AMOUNT Of the loan. The data
on which the loan IA made. the
terms OF repayment. including ths
total number Of instsllmeats and
the amount Of each installment,
and listing ~ separate items prin.
eipal. interest. Insurance preSnj-
uras and every other charge in
Guided In the actual amount ~
the lean
The regulations sere drawn 40
under authority Of q congressional
act Of 1919 setting tp The Fsgsiia-
tions for small Loan companies
and Eivins authority 10 prnnui-
gate further regulations 10 ifnpie.
msnt the act.
Mr.. Gray Was assisted IN draft
ing the proposed rules b. Martin
IF. oDonogkus and Prank Buek.
ley, both Of the District Bar Asso.
cations Small Lean COMMITTEES.
and Assistant Corporation coan-
sells Lee Dante and Harry walker.