Clarifications about which motor vehicle dealers are subject to the Federal Reserve’s Regulation M – or which are subject to the federal consumer bureau’s rules under the Consumer Leasing Act (CLA) – are being proposed by the central bank, according to filings made by the Fed Tuesday.
The proposal will be issued for a 60-day comment period.
The Fed is proposing that its Regulation M (consumer leasing) be revised to reflect changes in the law which transferred many consumer financial protection laws to the Consumer Financial Protection Bureau (CFPB). Among them was rulemaking authority for the CLA, which was transferred to the bureau by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
However, the Fed retains authority to issue rules for motor vehicle dealers that are “predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both, and are otherwise not subject to the Bureau’s regulatory authority.” The proposal reflects the changes made by the Dodd-Frank Act and the rulemaking authority still retained by the Fed.
The Fed also proposes to eliminate guidance regarding “branches of foreign banks or leasing companies located in the United States.” It said the guidance is “inapplicable” in that the Fed does not believe motor vehicle dealers intended to be covered by Reg M “operate in this way.”