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7 Cumb. L. Rev. 255 (1976-1977)
Truth-in-Lending: Regulatory Uncertainty

handle is hein.journals/cumlr7 and id is 269 raw text is: TRUTH-IN-LENDING: REGULATORY
UNCERTAINTY
REID B. BARNES IH*
Between the end of World War II and the mid 1960's, the
outstanding consumer debt in the United States increased from
5.6 billion dollars to 95.9 billion dollars.' Yet as Congressional
studies indicated, credit consumers remained largely uninformed
of the nature of their credit obligations.' It was apparent to some
critics that such blind economic activity was inconsistent with
the efficient functioning of this nation's free market economy. As
a result, in 1968, the Congress of the United States enacted the
Truth-in-Lending Act,' thereby imposing uniform              disclosure4 re-
quirements on creditors for the purpose of informing borrowers of
the credit terms of their loans.' It should be recognized at the
outset that the Truth-in-Lending Act constitutes a new approach
to governmental regulation. It regulates disclosure of credit terms
rather than regulating the credit industry or imposing restrictions
on charges, areas generally dealt with by state enactments.' In
* B.A., Vanderbilt University; J.D., Cumberland School of Law.
See H.R. REP. No. 1040, 90th Cong., 2d Sess. 2 U.S. CODE CONG. & AD. NEWS 1962,
1966 (1968).
2 See Hearings on H.R. 11601 Before the Subcomm. on ConsumerAffairs of the House
Comm. on Banking and Currency, 90th Cong., 1st Sess. pt. 1 at 76 (1967) (statements of
Joseph Barr, the then Under Secretary of the Treasury).
. 15 U.S.C. §§ 1601 et seq. (1974). Administrative regulations issued by the Federal
Reserve Board are found at 12 C.F.R. § 226.1 et seq. (1974).
1 Disclosure is a term of art in the context of the Truth-in-Lending Act. Regulation
Z requires that . . . disclosures . . . shall be made clearly, conspicuously, in meaningful
sequence, in accordance with the further requirements of this section, and at the time and
in the terminology prescribed in applicable sections. 12 C.F.R. § 226.6 (1974).
These disclosures are required to be in a separate disclosure statement or grouped
together on the credit instrument above or adjacent to the place provided for the cus-
tomer's signature. 12 C.F.R. § 226.8 (1974).
The Congress had determined that a large number of persons constituting the
general public were uninformed about credit terms and sought to enhance the quality of
economic competition by enacting legislation which would place credit consumers in a
position to make informed choices between potential creditors. For example, 800 families
were asked to estimate the annual rate of finance charges they were paying on consumer
debts. Although the average actual rate paid was 24 percent, the average estimated rate
was only 8.3 percent. See S. REP. No. 392, 90th Cong., 1st Sess. 3 (June 29, 1967). See
also 15 U.S.C. § 1601 (1974) for the Congressional statement of purpose, infra note 6.
H.R. REP. No. 1040, 90th Cong., 2d Sess. 2 U.S. CODE CONG. & AD. NEWS 1962,
1963 (1968). The general purpose of the Act is explicitly stated:
The Congress finds that economic stabilization would be enhanced and the
competition among the various financial institutions and other firms engaged

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