Bill S3588-2013

Extends the effectiveness of certain provisions relating to permissible fees in connection with open end loans

Extends the effectiveness of certain provisions relating to permissible fees in connection with open end loans.

Details

Actions

  • Apr 30, 2013: SUBSTITUTED BY A4528
  • Apr 29, 2013: ADVANCED TO THIRD READING
  • Apr 24, 2013: 2ND REPORT CAL.
  • Apr 23, 2013: 1ST REPORT CAL.428
  • Feb 7, 2013: REFERRED TO BANKS

Votes

VOTE: COMMITTEE VOTE: - Banks - Apr 24, 2013
Ayes (18): Griffo, Farley, Bonacic, DeFrancisco, Golden, Marchione, Martins, Marcellino, O'Mara, Ranzenhofer, Savino, Valesky, O'Brien, Breslin, Diaz, Avella, Parker, Gipson
Nays (1): Sanders

Memo

BILL NUMBER:S3588

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: Continues for two years, the existing statutory authority for licensed lenders to charge annual fees on open-end personal loans.

SUMMARY OF PROVISIONS: Amends the effective date of Chapter 223 of the Laws of 1996 extending for two years (June 30, 2015), the authority of licensed lenders to charge annual fees on open-end personal loans.

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 S50. 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 and 2011 extending this authority. The provisions of this law are currently scheduled to expire on June 30, 2013.

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 additional costs are incurred in the administration of revolving loans, such as the preparation and mailing of monthly billing statements, the processing of transactions and increased monitoring costs.

For these reasons, banking institutions have long had the ability to charge annual fees on 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 with regard to fees on open-end personal loans. Therefore, this bill would extend the provisions of the 1996 law for two years.

LEGISLATIVE HISTORY: New.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediate.


Text

STATE OF NEW YORK ________________________________________________________________________ 3588 2013-2014 Regular Sessions IN SENATE February 7, 2013 ___________
Introduced by Sen. GRIFFO -- read twice and ordered printed, and when printed to be committed to the Committee on Banks 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 THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 3 of chapter 223 of the laws of 1996, amending the banking law relating to permissible fees in connection with open end loans, as amended by chapter 114 of the laws of 2011, is amended to read as follows: S 3. This act shall take effect immediately, and remain in full force and effect until June 30, [2013] 2015, when, upon such date, the amend- ments made by this act shall expire and be deemed repealed, and the provisions of law amended by this act shall revert to their text and be read as they were immediately prior to the effective date of this act. S 2. This act shall take effect immediately.

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