BILL NUMBER: S8292
SPONSOR: SANDERS
 
TITLE OF BILL:
An act to amend chapter 223 of the laws of 1996 amending the banking law
relating to permissible fees in connection with open end loans, in
relation to extending the effectiveness thereof
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to continue for two years the existing stat-
utory authority for licensed lenders to charge annual fees on open-end
personal loans.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends the effective date of Chapter 223 of the Laws of 1996
to extend, for two years (to June 30, 2027), the authority of licensed
lenders to charge annual fees on open-end personal loans.
Section 2 contains the immediate effective date.
 
JUSTIFICATION:
In 1996, legislation was enacted to authorize licensed lenders to charge
annual fees on open-end loans. The law further provided that any such
fee may not exceed the lesser of 1% of the loan amount or $50. This 1996
law contained a sunset date of June 30, 2000. Legislation was enacted
in 2000 to extend this authority for another five years, and legislation
was enacted in 2005, 2007, 2009, 2011, 2013, 2015, 2017, 2019, 2021 and
2023 to extend this authority for an additional two years. The
provisions of 1996 law are currently scheduled to expire on June 30,
2027.
The 1996 law recognized that annual fees are a commonly used feature in
the pricing of open-end loan products, such as credit cards, home equity
loans and personal loans. This type of fee reflects the fact that addi-
tional costs are incurred in the administration of revolving loans, such
as the preparation and mailing of monthly billing statements, the proc-
essing of transactions and increased monitoring costs.
For these reasons, banking institutions have long had the ability to
charge annual fees in open-end loan products. Licensed lenders have also
had the ability to charge annual fees on certain open-end products, such
as credit cards and home equity_loans. However, prior to 1996, they did
not have authority to charge annual fees on open-end personal loans.
Chapter 223 of 1996 gave licensed lenders the same pricing flexibility
as banking institutions in regard to charging annual fees on open-end
personal loans. Licensed lenders should continue to have this flexibili-
ty in pricing their loan products. Therefore, this bill would extend the
provisions of the 1996 law for another two years.
 
PRIOR LEGISLATIVE HISTORY:
New bill
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None
 
EFFECTIVE DATE:
Immediate