S 10688: Opts the state out of certain provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980, Public Law 96-221; establishes applicable interest limitations.

  
  STATE OF NEW YORK ________________________________________________________________________ 10688  IN SENATE August 26, 2026 ___________ Introduced by Sen. MYRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the banking law and the financial services law, in relation to opting the state out of certain provisions of the Deposi- tory Institutions Deregulation and Monetary Control Act of 1980, Public Law 96-221 The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Legislative findings. The regulation of interest and usury 2 is among the oldest exercises of the states' police powers. New York, in 3 its exercise of that police power, has a substantial and longstanding 4 interest in protecting its residents, its communities, and its economy 5 from excessive interest and evasions of its lending laws. Before the 6 Depository Institutions Deregulation and Monetary Control Act of 1980 7 (DIDMCA) codified federal rate exportation, the law governing an inter- 8 state consumer-usury dispute generally favored the jurisdiction in which 9 the consumer resided, entered the transaction, received credit, and 10 incurred the debt. After DIDMCA, that balance shifted, and in addition 11 to national banks benefitting from rate exportation, sections five 12 hundred twenty-one through five hundred twenty-three of the DIDMCA 13 extended specified federal interest-rate authority to certain state- 14 chartered institutions. Section five hundred twenty-five of that act, 15 however, expressly permits a state to provide that it does not want such 16 provisions to apply with respect to loans made in that state. The legis- 17 lature finds that in pursuit of its longstanding police power to regu- 18 late interest and usury in this state, New York elects to not have such 19 provisions apply to consumer credit transactions, including loans, in 20 this state. Further, Congress used different geographic language in 21 sections five hundred twenty-one and five hundred twenty-five. Section 22 five hundred twenty-one refers to the state where the bank is located; 23 section five hundred twenty-five refers to loans made in a state. 24 Accordingly, the legislature finds that the location of an institution 25 and the place where a transaction is made are distinct inquiries. Relat- 26 edly, the United States Court of Appeals for the Second Circuit has EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD16307-02-6 
 S. 10688 2 1 recognized, in the context of remote high-cost lending, New York's 2 substantial regulatory interest where consumers apply for loans from New 3 York, receive extensions of credit in New York, and authorize with- 4 drawals from accounts located in New York. The legislature thus addi- 5 tionally finds that a consumer credit transaction may be made in more 6 than one jurisdiction. In remote and digital lending, material portions 7 of a transaction occur in New York when a New York consumer is solicited 8 or applies here, accepts an agreement here, receives funds or access to 9 credit here, incurs indebtedness here, uses a New York payment account, 10 or is serviced or collected from here. 11 This act exercises an election Congress expressly preserved. It does 12 not regulate the rates charged by a national bank or other federally 13 chartered institution to the extent federal law preempts such regu- 14 lation. It simply restores otherwise applicable New York law for covered 15 transactions to the fullest extent permitted by federal law. 16 § 2. Subdivision 7 of section 14-a of the banking law, as added by 17 chapter 883 of the laws of 1980, is amended to read as follows: 18 7. (a) Nothing contained in this section nor in any other provision of 19 this act whereunder this section is added to the banking law shall be 20 deemed to prohibit the charging of interest at the rates provided or 21 permitted by United States Public Laws 96-161[, 96-221] and 96-399, 22 where applicable. 23 (b) (i) Pursuant to section five hundred twenty-five of the Depository 24 Institutions Deregulation and Monetary Control Act of 1980, Public Law 25 96-221, the state of New York hereby provides explicitly that the amend- 26 ments made by sections five hundred twenty-one, five hundred twenty-two 27 and five hundred twenty-three of such act shall not apply with respect 28 to covered consumer credit transactions made in this state on or after 29 the effective date of this paragraph. 30 (ii) The election made by subparagraph (i) of this paragraph includes, 31 without limitation and to the extent applicable, the federal interest- 32 rate authority codified at section 1831d of title 12 of the United 33 States code and any successor provision derived from sections five 34 hundred twenty-one through five hundred twenty-three of the Depository 35 Institutions Deregulation and Monetary Control Act of 1980. 36 (iii) This paragraph shall not be construed to affect a loan made 37 pursuant to a commitment entered into before the effective date of this 38 paragraph where federal law requires continued application of such 39 federal interest-rate authority. 40 § 3. The financial services law is amended by adding a new article 11 41 to read as follows: 42 ARTICLE 11 43 APPLICABLE INTEREST LIMITATIONS 44 Section 1101. Definitions. 45 1102. Transactions made in this state. 46 1103. Application of New York law. 47 1104. Enforcement and remedies. 48 § 1101. Definitions. For the purposes of this article: 49 1. "Applicable New York interest limitation" means any maximum rate or 50 other limitation on interest, finance charges, fees or other consider- 51 ation imposed by the constitution, laws or regulations of this state 52 that would apply to a covered consumer credit transaction in the absence 53 of the federal interest-rate authority described in subdivision seven of 54 section fourteen-a of the banking law. 
 S. 10688 3 1 2. "Consumer" means a natural person who is a resident of this state 2 and to whom credit is offered or extended primarily for personal, family 3 or household purposes. 4 3. "Consumer credit transaction" means a loan, credit sale, advance, 5 line of credit, open-end consumer credit plan, credit-card account, 6 balance transfer, cash advance or other extension of credit to a consum- 7 er. Such term shall not include credit secured by a first lien on real 8 property or a dwelling. 9 4. "Covered consumer credit transaction" means a consumer credit tran- 10 saction made in this state for which a covered state-chartered institu- 11 tion or a covered participant asserts, relies upon, or would be entitled 12 in the absence of the election made by subdivision seven of section 13 fourteen-a of the banking law to assert or rely upon, federal interest- 14 rate authority derived from sections five hundred twenty-one through 15 five hundred twenty-three of the Depository Institutions Deregulation 16 and Monetary Control Act of 1980. A transaction is not excluded because 17 it is open-end credit or accessed by a credit card or similar device. 18 5. "Covered state-chartered institution" means a state-chartered 19 insured depository institution, insured savings association, state-char- 20 tered credit union, insured branch of a foreign bank, or other institu- 21 tion within the scope of sections five hundred twenty-one through five 22 hundred twenty-three of the Depository Institutions Deregulation and 23 Monetary Control Act of 1980. Such term does not include a national 24 bank, federal savings association, federal credit union, or other feder- 25 ally chartered institution, except to the extent Congress authorizes 26 application of state law. 27 6. "Covered participant" means a person other than a consumer that, 28 with respect to a covered consumer credit transaction, markets, solic- 29 its, arranges, facilitates, underwrites, funds, services, administers, 30 purchases, acquires, owns a legal or beneficial interest in, securi- 31 tizes, collects, or enforces such transaction, or receives a material 32 portion of the revenues, interest or fees arising therefrom. 33 § 1102. Transactions made in this state. 1. A consumer credit trans- 34 action is made in this state when the consumer is a resident of this 35 state at the time the account is opened or the transaction is consum- 36 mated and one or more material acts necessary to create, fund, use, 37 service, repay, collect or enforce the obligation occurs in this state. 38 2. Material acts under subdivision one of this section include, but 39 are not limited to: 40 (a) solicitation, marketing or delivery of an offer to the consumer in 41 this state by any means; 42 (b) the consumer's submission of an application, acceptance or author- 43 ization from this state; 44 (c) execution, acceptance, formation or delivery of the agreement in 45 this state; 46 (d) delivery to or receipt by the consumer of funds, purchasing power 47 or access to credit in this state; 48 (e) the consumer's incurrence of indebtedness or use of credit in this 49 state; 50 (f) delivery or activation of a credit card or other access device in 51 this state; 52 (g) billing, servicing, repayment or collection directed to the 53 consumer in this state; or 54 (h) the use of a deposit account, payment account, payroll account or 55 other account located in this state to receive proceeds or make repay- 56 ment. 
 S. 10688 4 1 3. A consumer credit transaction may be made in more than one state. A 2 term in an agreement stating that a transaction is made, located or 3 governed exclusively in another jurisdiction shall not control the 4 determination under this section and shall not waive or alter this arti- 5 cle. 6 4. An open-end consumer credit plan, including a credit-card account, 7 is made in this state when the account is opened in accordance with 8 subdivision one of this section. Each advance, purchase, cash advance or 9 balance transfer under an account opened on or after the effective date 10 of this article is part of the covered consumer credit transaction. A 11 consumer's temporary presence outside this state when using such account 12 does not alter the location of the account. 13 § 1103. Application of New York law. 1. Notwithstanding any other 14 provision of law, a covered consumer credit transaction made in this 15 state on or after the effective date of this article is subject to the 16 applicable New York interest limitation and to the otherwise applicable 17 laws of this state concerning the charging, taking, receiving, reserv- 18 ing, collection and enforcement of interest. 19 2. No covered state-chartered institution or covered participant shall 20 charge, take, receive, reserve, collect, attempt to collect or enforce 21 an amount prohibited by the law applicable under subdivision one of this 22 section. 23 § 1104. Enforcement and remedies. 1. The superintendent and the attor- 24 ney general may each enforce this article. In addition to any power 25 provided by law, either may investigate a suspected violation, issue 26 subpoenas, require production of records, seek an injunction, obtain 27 restitution or refund of unauthorized interest or fees, obtain disgorge- 28 ment, require correction of account and credit-reporting information, 29 and obtain such other equitable relief as a court deems appropriate. 30 2. After notice and an opportunity to be heard, the superintendent may 31 impose, and a court in an action brought by the attorney general may 32 award, a civil penalty not exceeding two thousand five hundred dollars 33 for each violation or ten thousand dollars for each knowing or willful 34 violation. In determining the amount, consideration shall be given to 35 the seriousness of the violation, consumer harm, good faith, history of 36 previous violations, ability to pay, cooperation and such other matters 37 as justice may require. 38 § 4. If any clause, sentence, paragraph, subdivision, section or part 39 of this act or its application to any person or circumstance is adjudged 40 invalid or preempted, such judgment shall not affect, impair or invali- 41 date any other clause, sentence, paragraph, subdivision, section, part 42 or application that can be given effect without the invalid or preempted 43 provision or application. 44 § 5. This act shall take effect on the one hundred eightieth day after 45 it shall have become a law. Effective immediately, the addition, amend- 46 ment and/or repeal of any rule or regulation necessary for the implemen- 47 tation of this act on its effective date are authorized to be made and 48 completed on or before such effective date.