Magazine article American Banker

New Lease Disclosure Forms Delayed to Make Terms Clearer for Consumers

Magazine article American Banker

New Lease Disclosure Forms Delayed to Make Terms Clearer for Consumers

Article excerpt

Bankers say they support efforts by the Federal Reserve to make leasing disclosure forms easier to read, but they warn that some of the proposed changes won't lessen customer confusion.

Apparently, the Fed is listening. On Monday, the agency extended the comment period on the proposed changes to Regulation M. The industry now has an extra three months, until Feb. 15, to make its views known.

W. Kurt Schumacher, staff attorney at the Fed, said the comment period was extended so the agency could form focus groups of consumers to review the proposed changes.

Ninety-eight letters were received by the original Nov. 17 deadline, with most backing the proposal in principle while questioning the specifics.

Mr. Schumacher said the agency isn't expecting many more letters from bankers and has begun examining the comments already in hand.

The extension isn't expected to delay implementation of a final rule, which should occur in the second quarter of 1996.

In the proposal, issued Sept. 13, the Fed said 11 disclosures should be highlighted in each lease, including such new points as: gross cost, residual value, and estimated lease charge.

Banks would have a number of options for emphasizing the 11 disclosures, such as the use of distinct typefaces.

Among the new disclosures, gross cost is defined as the total value of all items included in a lease at consummation. Residual value is the property's predetermined worth at the end of the lease term. Estimated lease charge is the amount of interest and fees the customer pays either up front or during the term of the lease. …

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