(a) Inconsistent state laws. Except as otherwise provided in this
section, this regulation alters, affects, or preempts only those state
laws that are inconsistent with the act and this regulation and then
only to the extent of the inconsistency. A state law is not inconsistent
if it is more protective of an applicant.
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(b) Preempted provisions of state law.
(1) A state law is deemed
to be inconsistent with the requirements of the act and this regulation
and less protective of an applicant within the meaning of section
705(f) of the act to the extent that the law—
(i) requires
or permits a practice or act prohibited by the act or this regulation;
(ii) prohibits the
individual extension of consumer credit to both parties to a marriage
if each spouse individually and vol- untarily applies for such credit;
(iii) prohibits inquiries
or collection of data required to comply with the act or this regulation;
(iv) prohibits asking
or considering age in an empirically derived, demonstrably and statistically
sound, credit scoring system to determine a pertinent element of creditworthiness,
or to favor an elderly applicant; or
(v) prohibits inquiries necessary to
establish or administer a special-purpose credit program as defined
by section 202.8.
(2) A creditor, state, or other interested
party may request that the Board determine whether a state law is inconsistent
with the requirements of the act and this regulation.
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(c) Laws on finance charges,
loan ceilings. If married applicants voluntarily apply for and
obtain individual accounts with the same creditor, the accounts shall
not be aggregated or otherwise combined for purposes of determining
permissible finance charges or loan ceilings under any federal or
state law. Permissible loan ceiling laws shall be construed to permit
each spouse to become individually liable up to the amount of the
loan ceilings, less the amount for which the applicant is jointly
liable.
(d) State and
federal laws not affected. This section does not alter or annul
any provision of state property laws, laws relating to the disposition
of decedents’ estates, or federal or state banking regulations directed
only toward insuring the solvency of financial institutions.
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(e) Exemption for state-regulated transactions.
(1) Applications. A state may apply to the Board for an exemption
from the requirements of the act and this regulation for any class
of credit transactions within the state. The Board will grant such
an exemption if the Board determines that—
(i) the class of credit
transactions is subject to state law requirements substantially similar
to the act and this regulation or that applicants are afforded greater
protection under state law; and
(ii) there is adequate provision for
state enforcement.
(2) Liability
and enforcement.
(i) No exemption will extend to the
civil-liability provisions of section 706 or the administrative-enforcement
provisions of section 704 of the act.
(ii) After an exemption has been granted,
the requirements of the applicable state law (except for additional
requirements not imposed by federal law) will constitute the requirements
of the act and this regulation.
