Magazine article American Banker

Fleet, Shawmut Propose to Sell off 64 Branches to Clear Antitrust Hurdle

Magazine article American Banker

Fleet, Shawmut Propose to Sell off 64 Branches to Clear Antitrust Hurdle

Article excerpt

WASHINGTON - The Federal Reserve Board on Wednesday proposed a substantial rewrite of consumer leasing rules, including several new disclosure requirements.

The planned revisions would affect consumer leases of $25,000 or less that extend more than four months. Most such leases are for new cars, although some cover furniture and electronic equipment. Large banks and finance companies control most of this business.

The proposal, out for comment until October, would require bankers to reveal "gross cost" - defined as the price of the product, plus taxes, fees, service contracts, and insurance.

Banks also would have to calculate the "estimated lease charge," which includes all interest and other charges a consumer must pay during the life of the lease.

A standardized form would include these and other disclosures in one place, clearly detailing lease terms. For example, the form lists the cost of terminating a lease after one year, the charge for excessive mileage, and the cost of buying the property after the lease ends.

Currently, companies can spread disclosures throughout the contract document.

The Fed's proposal does not require lessors to calculate the annual interest rate consumers will pay. "Staff believes the burden to the industry would outweigh the benefits to consumers," said staff attorney W. Kurt Schumacher.

That disturbed Fed Vice Chairman Alan Blinder and Governor Janet Yellen. They argued that the new disclosure requirements could make it easier for salesmen to deceive consumers. …

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