SUPPORTING STATEMENT
RECORDKEEPING AND DISCLOSURE REQUIREMENTS
IN CONNECTION WITH REGULATION Z
(OMB No. 3064‑0082)
INTRODUCTION
The Federal Deposit Insurance Corporation (“FDIC”) is requesting OMB approval to extend, with revisions, the information collection previously approved as 3064-0082. The current clearance for the collection expires on August 31, 2011.
A. Justification
.
1. Circumstances and Need
The requirements for this collection are contained in Regulation Z – Truth in Lending, 12 C.F.R. Part 226, issued by the Board of Governors of the Federal Reserve System (“FRB”). Regulation Z is issued under authority of 15 U.S.C. § 1604 and implements the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq. Pursuant to an agreement between OMB and the FRB, the Federal Reserve accounts for the paperwork burden associated with Regulation Z for state member banks (SMBs) and other creditors supervised by the Federal Reserve that engage in lending covered by Regulation Z and other federal agencies, including the FDIC, account for the paperwork burden on creditors engaging in lending covered by Regulation Z that they supervise.
Regulation Z requires creditors to disclose certain costs and terms to consumers, using a specified format and terminology, at or before the time consumers enter into a consumer credit transaction and when the availability for consumer credit on particular terms is advertised. For open-ended credit, such as revolving credit accounts, creditors are required to disclose information about the initial costs and terms and to provide periodic statements of account activity, notices of changes in terms, and statements of rights concerning billing error procedures. The regulation also requires specific types of disclosures for credit and charge accounts, and home equity plans. For closed-end loans, such as mortgage and installment loans, cost disclosures are required to be provided prior to consummation. Special disclosures are required of certain products, such as reverse mortgage and installment loans, certain variable rate loans, and certain mortgages with rates and fees above specified thresholds. TILA and Regulation Z also contain rules concerning credit advertising. Creditors are required to retain evidence of compliance for twenty-four months, but the regulation does not specify the types of records that must be retained.
On December 16, 2010, the Federal Reserve published a notice of proposed rulemaking (NPRM) in the Federal Register (75 FR 78636) requesting public comment on the proposed amendments to Regulation Z. The proposed amendments were designed to implement 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. The Dodd-Frank Act raised TILA’s $25,000 exemption threshold to $50,000, effective July 21, 2011. 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. Beginning on January 1, 2012, the $50,000 threshold will be adjusted annually based on any annual percentage increase in the CPI–W. On April 4, 2011, a notice of final rulemaking was published in the Federal Register (76 FR 18354) adopting the amendments largely as proposed, with mandatory compliance by July 21, 2011.
The Federal Reserve estimated that the final rule would impose a one-time increase per respondent of 40 hours to update their systems to comply with the requirements of Regulation Z for loans that are no longer exempt. In addition, the Federal Reserve estimated that, on a continuing basis, the revision to the rule would increase the annual burden for each respondent by 8 hours.
2. Use of Information Collected
Regulation Z promotes the informed use of consumer credit by ensuring adequate disclosure of the costs and terms of credit to consumers.
3. Use of Technology to Reduce Burden
The Regulation Z information collection consists primarily of third party disclosures. Institutions may provide electronic disclosures consistent with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §§ 7001 et seq., and § 226.36 of Regulation Z.
4. Efforts to Identify Duplication
The disclosures and recordkeeping are required when specified events occur and their content does not overlap with other requirements.
5. Minimizing the Burden on Small Businesses
Generally, TILA requires that the disclosures be made notwithstanding the size of the institution. The FRB provides model forms to ease the compliance burden for small institutions.
6. Consequence of Less Frequent Collections
The recordkeeping and disclosure requirements are event based and may not be made less frequently consistent with the underlying statute.
7. Special Circumstances
None.
8. Consultation with Persons Outside the FDIC
A “first” Federal Register notice seeking comment on the FDIC’s proposal to extend this information collection was published on April 28, 2011 (76 FR 23814). No comments were received.
9. Payment or Gift to Respondents
None.
10. Confidentiality
As no information is collected, no issue of confidentiality arises.
11. Questions of a Sensitive Nature
No questions of a sensitive nature are included in this collection
12. Estimates of Annualized Hour Burden and Associated Cost1
Burden Estimate |
Number of Respondents |
Annual Frequency |
Response Time |
Annual Burden Hours |
Subpart B Open-End Credit Initial Disclosures Change in Terms |
4,380 4,380 |
1,150 2,500 |
1.5 minutes 1.0 minute |
125,925 182,500 |
Periodic Statements Periodic Statements (R-1399)2 |
4,380 4,380 |
12 1 |
8 hours 8 hours |
420,480 35,040 |
Error Resolution Credit Cards Other Reg. Z Complaints |
1,047 4,380 |
145 2 |
30 minutes 30 minutes |
75,908 4,380 |
Credit & Charge Card Accounts Advance Disclosures |
1,047 |
12 |
8 hours |
100,512 |
Home Equity Plans Advance disclosure Change in terms |
2,867 2,867 |
790 10 |
1.5 minutes 3.0 minutes |
56,623 1,434 |
Subpart C Closed-end credit disclosures |
4,380 |
2,472 |
6.5 minutes |
1,172,964 |
Sections 226.16 and 226.24 Advertising |
4,380 |
5 |
25 minutes |
9,125 |
Subpart E Pre-closing disclosure |
97 |
250 |
3 minutes |
1,213 |
Sub-total (ongoing) |
|
|
|
2,186,104 |
Sub-total (one-time systems change to reflect increase in exemption threshold) |
4,380 |
1 |
40 hours |
175,200 |
Total |
|
|
|
2,361,304 |
Estimated annual cost to FDIC supervised institutions (at $20 hourly cost) is $51,075,500.
13. Capital/Start-up and Operation/Maintenance Cost
None.
14. Cost to Government
Since the FDIC does not collect any information, the cost to the FDIC is negligible.
15. Reason for Change in Burden
The change in burden from 2,553,775 hours to 2,361,304 hours reflects an adjustment of -402,711 hours arising from a decrease in the number of respondents and program changes of +35,040 hours for ongoing Regulation Z compliance for loans that are no longer exempt and +175,200 hours for one-time systems updates to capture loans that are no longer exempt.
16. Publication
There is no publication of the information reported.
17. Display of Expiration Dates
Not applicable to these disclosures.
18. Exceptions to Certification
None.
B. STATISTICAL METHODS
Not applicable.
1 The FDIC burden estimates are based on FRB estimates adjusted for FDIC circumstances such as the number of FDIC regulated institutions.
2 Entries in bold reflect program changes as mandated by Dodd-Frank and implemented by the FRB.
| File Type | application/msword |
| File Title | SUPPORTING STATEMENT |
| Author | FDIC |
| File Modified | 2011-08-18 |
| File Created | 2011-08-18 |