BILL NUMBER: S10688
SPONSOR: MYRIE
 
TITLE OF BILL:
An act to amend the banking law and the financial services law, in
relation to opting the state out of certain provisions of the Depository
Institutions Deregulation and Monetary Control Act of 1980, Public Law
96-221
 
PURPOSE:
To exercise New York's express authority under section 525 of the feder-
al Depository Institutions Deregulation and Monetary Control Act of 1980
(DIDMCA); restore otherwise applicable New York law to consumer credit
made in New York through covered state-chartered institutions.
 
SUMMARY OF PROVISIONS:
Section 1 establishes the legislative findings.
Section 2 amends Subdivision 7 of section 14-a of the banking law, as
added by chapter 883 of the laws of 1980.
Section 3 amends the financial services law by adding a new article 11
called Applicable Interest Limitations.
Section 4 is the severability clause.
Section 5 sets the effective date on the one hundred eightieth day after
it becomes a law.
 
JUSTIFICATION:
New York law generally limits civil interest and treats knowingly charg-
ing or receiving more than twenty-five percent without lawful authori-
zation as criminal usury. Yet New Yorkers are currently offered consumer
credit, including credit cards, at annual percentage rates above twen-
ty-five percent through programs involving state-chartered institutions
located in jurisdictions permitting higher rates.
Those offers are currently lawful under federal law. Section 521 of
DIDMCA, codified at 12 U.S.C. § 1831d, permits a federally insured
state-chartered institution to invoke specified federal authority based
on the law where the bank is located. But Congress included § 525, which
expressly permits a state to declare that it does not want that authori-
ty to apply to loans made in the state. This bill makes that election
for New York.
This bill recognizes that remote credit is not made solely at a lender's
headquarters. A New York resident may be solicited here, apply and
accept here, receive access to credit here, incur the debt here, pay
through a New York account, and be serviced and collected from here. The
bill therefore provides that a transaction may be made in more than one
state and is made in New York when a New York consumer and a material
New York transactional act are present.
Binding Second Circuit authority likewise recognizes New York's substan-
tial interest in remote lending where New York residents apply, receive
credit and authorize repayment here (Otoe-Missouria Tribe of Indians v.
New York State Department of Financial Services, 769 F.3d 105 (2d Cir.
2014)).
 
LEGISLATIVE HISTORY:
New Bill
 
FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.

Statutes affected:
S10688: 14-a banking law, 14-a(7) banking law