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1.5.3.4.2 Open-end credit review

There were five stated goals of the open-end credit review: (1) to improve the effectiveness and usefulness of open-end disclosures; (2) to consider concerns about information overload; (3) to study alternatives for improving the format of disclosures; (4) to improve the substantive protections included in the act, most notably, those addressing inaccurate and unfair credit card and billing practices; and (5) to facilitate creditor compliance and to reduce unnecessary regulatory burden.246

The advance notice for the open-end credit review posed no less than fifty-eight questions for comment. Following the close of the comment period on March 28, 2005, the FRB convened consumer focus groups to provide feedback about credit card disclosures.247 After receipt of the consulting firm’s report and review of the filed comments, the FRB published proposed amendments to Regulation Z and the Official Staff Interpretations on June 14, 2007.248 The FRB received over 3,000 comments to the proposed amendments.249 This response prompted the FRB to engage in a rulemaking to substantively regulate credit card practices using its authority under the Federal Trade Commission Act.250

A final rule amending Regulation Z and the commentary was issued in January 2009.251 Five months later, Congress passed the Credit Card Accountability, Responsibility and Disclosures (CARD) Act of 2009.252 The FRB was required to engage in further extensive rulemaking to implement the provisions of the Credit CARD Act, which it did. This final rule was published in three stages,253 and is discussed in detail at Chapter 7, infra.

Footnotes

  • 246 {214} 69 Fed. Reg. 70,926 (Dec. 8, 2004).

  • 247 {215} International Inc., Design and Testing of Effective Truth in Lending Disclosures 9, 26 (2007), available at www.federalreserve.gov. See also 72 Fed. Reg. 32,948, 32,955 (June 14, 2007) (describing how the focus groups were used to test their understanding of the APR).

  • 248 {216} 72 Fed. Reg. 32,948 (June 14, 2007).

  • 249 {217} H.R. 627, the Credit Cardholders’ Bill of Rights Act of 2009; and H.R. 1456, the Consumer Overdraft Protection Fair Practices Act of 2009: Hearing Before the Subcomm. on Fin. Institutions and Consumer Credit of the H. Comm. of Fin. Serv., 111th Cong. 8 (2009) (testimony of Sandra Braunstein, Director, Division of Consumer and Community Affairs, Federal Reserve Board).

  • 250 {218} 73 Fed. Reg. 28,904 (May 19, 2008); 74 Fed. Reg. 5498 (Jan. 29, 2009).

  • 251 {219} 74 Fed. Reg. 5244 (Jan. 29, 2009).

  • 252 {220} Pub. L. No. 111-24, §§ 201(a), 202, 123 Stat. 1736 (May 22, 2009).

  • 253 {221} 74 Fed. Reg. 36,077 (July 22, 2009); 75 Fed Reg. 7658 (Feb. 22, 2010); 75 Fed. Reg. 37,526 (June 29, 2010).