The Federal Reserve Board on Wednesday clarified that banks may not mail unsolicited credit cards to consumers, even if the product also serves as a stored-value card.
In its revised Truth-in-Lending Act staff commentary, the Fed also said banks may send out cards imprinted with a consumer's name, provided the cards are not connected to a credit plan.
Because the prior rule was unclear on whether banks could distribute joint credit/stored-value cards without a customer's prior approval, the Fed said banks should not be held liable for inadvertent Truth-in-Lending violations.
The commentary also clarifies how to calculate loan payment schedules when the borrower has private mortgage insurance.
Also on Wednesday, the Fed clarified its consumer leasing rules. The changes to the Regulation M staff commentary deal with lease renegotiations, official fees and taxes, multiple leases, and advertisements.
Both staff commentaries are effective March 31, 2000, though banks may opt in early.
This week the Fed gave G-B-G Inc. of Wilton, Iowa, permission to acquire Peoples National Corp. of Columbus Junctions, Iowa, and its Community Bank subsidiary.
The Fed rejected as unsubstantiated a protest from a minority shareholder of Peoples National Corp., who questioned whether the company had the financial resources to complete the deal.