BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.  20551

DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS

CA 08-4

July 31, 2008

TO THE OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS SECTIONS AT EACH FEDERAL RESERVE BANK AND TO BANKING ORGANIZATIONS SUPERVISED BY THE FEDERAL RESERVE:

SUBJECT: Interagency Examination Procedures for the Department of Defense's Final Rule on Limitations on Consumer Credit Extended to Service Members and Dependents ("Talent Amendment")

The Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council recently approved the attached examination procedures to be used when determining compliance with regulations issued by the Department of Defense (DoD) regarding limitations on consumer credit extended to service members and dependents. The DoD rule covers payday loans, motor vehicle title loans, and tax refund anticipation loans, as defined by DoD, and applies to all persons engaged in the business of extending such credit and their assignees. The DoD rule limits the amount that a creditor can charge service members and their dependents in connection with a covered transaction. Total charges must be expressed as a total dollar amount and as an annualized rate referred to as the "Military Annual Percentage Rate" or "MAPR," which may not exceed 36 percent. The rule applies to consumer credit extended to a covered borrower and consummated on or after October 1, 2007.

Federal Reserve Banks are asked to distribute this letter and accompanying attachment to banking organizations supervised by the Federal Reserve in their districts, as well as to supervisory and examination staff. If you have any questions, please contact Eric Morris, Supervisory Consumer Financial Services Analyst at (202) 452-3946, or Paul Robin, Manager, Oversight and Policy, at (202) 452-3140.

Sincerely,
(signed)

Sandra F. Braunstein
Director
Division of Consumer and Community Affairs

Attachment (revised as of 3/17/2009)