District Circular Letters

December 1, 1998

REGULATION Z:
REVISION TO OFFICIAL STAFF COMMENTARY
ADJUSTMENT OF DOLLAR AMOUNT

REGULATION M:
REVISION TO OFFICIAL STAFF COMMENTARY

REGULATION CC:
SOFTWARE CHANGES RELATING TO MERGERS

To Member and Nonmember Banks,
and Others Concerned
in the Twelfth Federal Reserve District

Regulation Z: Proposed Revisions to Official Staff Commentary (Docket R-1029)

The Federal Reserve Board has published proposed revisions to the official staff commentary that applies and interprets the requirements of Regulation Z, Truth in Lending. The proposed revisions address the issuance of unsolicited multifunction credit cards, credit sales involving trade-ins, and payment schedules that include private mortgage insurance.

Comment is requested by January 22, 1999.

Regulation Z: Adjustment of Dollar Amount Triggering Disclosure Requirements (Docket R-1030)

The Board has published its annual adjustment of the dollar amount that triggers additional disclosure requirements under the Truth in Lending for mortgage loans that bear fees above a certain amount. The Home Ownership and Equity Protection Act of 1994 bars credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed $400 (to be adjusted annually) or 8 percent of the total loan amount, whichever is larger.

The Board has adjusted the dollar amount from $435 for 1998 to $441 for 1999 based on the annual percentage change reflected in the Consumer Price Index that is in effect on June 1. The adjusted dollar amount is effective January 1, 1999.

Regulation M: Proposed Revisions to Official Staff Commentary Regarding Disclosures (Docket R-1028)

The Board has published proposed revisions to the official staff commentary that applies and interprets the requirements of Regulation M, Consumer leasing. The proposed revisions provide guidance on disclosures for lease advertisements, multiple-item leases, renegotiations and extensions, and estimates of official fees and taxes.

Comment is requested by January 22, 1999.

Regulation CC: Proposed Temporary Liberalization of Merger-Transition Provisions (Docket R-1027)

The Board is proposing to amend Regulation CC to allow banks that consummate merger transactions on or after July 1, 1998, and before June 1, 1999, greater time to implement software changes related to the merger. The Board recognizes that banks are currently dedicating their automation resources to renovating and testing software and replacing noncompliant systems to address Year 2000 and leap year computer problems. Because a large amount of banks' automation resources may be dedicated to these efforts, banks may have a difficult time completing and testing the programming changes that may be required to comply with Regulation CC's current merger transition provisions. This conflict may jeopardize the success of merging institutions' Year 2000 efforts and/or their system integration efforts. Therefore, the Board is proposing to allow banks that consummate a merger on or after July 1, 1998, and before June 1, 1999, to be treated as separate banks until June 1, 2000. Beginning in June 1999, the normal one-year transition period would resume.

Comment is requested by January 4, 1999.

Copies

Copies of the Board's notices (Docket R-1029, Docket R-1030, Docket R-1028, and Docket R-1027) are available from our Corporate Services Department. To request copies to be sent via mail, please call (415) 974-2748. To request copies to be sent via fax, please call (415) 974-3333, and specify document numbers 4243, 4148, 4245 and 4242, respectively.

Additional Information

For additional information regarding these matters, please contact our Banking Supervision and Regulation Department, at (415) 974-2977 [for Regulation Z and Regulation M], and our Law Department, at (415) 974-2256 [for Regulation CC].

FEDERAL RESERVE BANK OF SAN FRANCISCO