WASHINGTON (4/16/12)--The Consumer Financial Protection Bureau (CFPB) is considering revising Regulation Z so that a current 25%-of-available-credit limit would apply only to fees that are charged at account opening.
The Fed last year adopted language that would apply the 25% of credit-limit restriction to fees that are charged before an account is opened, such as application fees. That rule was scheduled to go into effect last October, but was blocked by a successful challenge. The CFPB became rule writer of the Reg Z provision under a transfer of responsibilities required by the Dodd-Frank Wall Street Reform Act.
First Premier Bank and Premier Bankcard LLC last year filed a lawsuit against the CFPB arguing that the regulator was exceeding its authority by seeking to regulate fees that are paid before account opening, and U.S. District Court for South Dakota Chief Judge Karen Schreier granted a motion for preliminary injunction.
The CFPB is considering amending Reg Z to Prompted by this recent litigation, the CFPB said it has proposed amending Reg Z to apply the 25% only to by only applying the 25% limitation to the first year following account opening. The potential amendment will remain open for public comment until June 11.
For a full CFPB release, use the resource link.