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1 Albert H. Kramer, Memorandum on the Amendment to the Holder in Due Course Rule, 16 C.F.R. Sec. 433 1 (1979)

handle is hein.usfed/mahdcrl0001 and id is 1 raw text is: UNITED STATES GQVERNMENT DAAusso1979 memorandum Albert H. Kramer, Director M : Bureau of Consumer Protection mrancl: Amendment to the Holder in Due Course Rule, 16 C.F.R. S 4 ?RETARY To. Comission On May 25, 1979, I forwarded the staff's final recommendations concerning the amendment to the Holder in Due Course Rule (Holder II) with a cover memorandum recommending against Commission promulgation of the amendment. My recommendation against promul- gation was based on the concern that the Commission, as a policy matter, needed some evidence that the original rule (Holder I) was not working and that the record, as it stood then, did not contain sufficient evidence on this point. I stated then, and I reiterate now, that I believe the Commission has clear legal authority to promulgate the amendment. My hesitation in endorsing such a step focused entirely on policy considerations. Events in this rulemaking proceeding have moved quickly since my original recommendation. Upon reexamining its Holder I enforce- ment files, staff discovered a compliance survey prepared by the Resource Planning Corporation. This survey purports to show significant noncompliance with Holder I in certain pockets of the retail seller industry, including used cars, home improvement and home furnishing loans, and direct sales. When this survey was brought to the Commission's attention, the Commission decided to reopen the Holder II rulemaking record for a limited period to permit comment on the survey and other material gathered by the staff during eighteen months of experience in enforcing Holder I. The record has now been supplemented with evidence that Holder I is not working to eliminate consumer injury in key segments of the marketplace. Although the advisability of promulgating the amendment is a close question, I believe that the addition of this evidence provides the Commission with sufficient documentation to support a policy determination that promulgation of Holder II is warranted. With this memorandum, I am forwarding an analysis of the new record material and the comments submitted on it which was prepared by the staff. Some of the comments filed concerning the new record material indicate confusion about the basis for my initial recommendation; a confusion which I believe was at least partially fostered by my May 25 memorandum. To better focus the issues for consideration Buy U.S. Savings Bonds Regularly on the Payroll Savings Plan

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