NY State Senate Bill 2019-S5880

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to consumer protection
May 16, 2019	referred to consumer protection

2019-S5880 (ACTIVE) - Details

See Assembly Version of this Bill:: A9078
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add §517-a, Gen Bus L

2019-S5880 (ACTIVE) - Summary

Establishes the New York state loan shark act; sets a maximum annual percentage rate of interest for credit cards of fifteen percent.

2019-S5880 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5880

SPONSOR: SANDERS
 
TITLE OF BILL:  An act to amend the general business law, in relation
to establishing the New York state loan shark act

 
PURPOSE:

This bill sets a state usury rate of 15 on credit cards and consumer
loans.

 
SUMMARY OF PROVISIONS:

§ 1. Provides that the title of the act shall he the "New York. state
loan shark act."

§ 2. Creates section 517-a of the general business law to define "annual
percentage rate of interest" or "annual percentage rate" and to cap the
"annual percentage rate of interest" or "annual percentage rate" at 15.

The superintendent of financial services may allow lenders to charge

higher rates if the superintendent determines that money market interest
rates have risen over the preceding six month period and the 15 usury
cap threatens the safety and soundness of individual lenders as shown by
adverse trends in liquidity, capital, earnings, and growth. Interest
rates can only be raised over 1St for a max of 18 months.

A lender who violates this section forfeits the entire interest due.

§ 3. This act shall take effect on the 19 day after it becomes law and
will apply to contracts entered, altered, modified, extended, or renewed
on or after the effective date.

 
JUSTIFICATION:

New Yorkers have high levels of consumer debt in the form of mortgages,
student loans and credit card balances. Financial institutions are
allowed to charge high interest rates and fees on these loans to the
detriment of working people.

In 2017, New York ranked fourth nationwide in credit card debt at $58.2
billion according to a report released by State Comptroller Thomas DiNa-
poll. New York had the seventh highest per capita credit card balance of
all states in 2017, at $3, 719, almost 20G higher than the national
average of $3,100 per capita. 8.3 of credit card debt in New York was
delinquent by 90 days or more, higher than the national overage of 7.5.

The Brom:, Utica-Rome, Watertown-Fort Drum, and Queens each had average
balances that were lower than the State and national averages but their
delinquency rates all exceeded these averages. Meanwhile, credit card
companies generated over $178 billion in interest and fees.

                        Average Balance        Percent 90+ Days Late

Bronx                      $4,600                       15.1
Utica-Rome                 $4,800                        8.6
Watertown-Fort Drum        $4,900                        8.4
Queens                     $5,200                        9.2
New York state             $5,800                        8.2
National                   $5,400                        8.3

 
LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect on the 19¤ day after it becomes law.

2019-S5880 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5880
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced  by  Sen. SANDERS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 AN ACT to amend the general business law, in  relation  to  establishing
   the New York state loan shark act
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "New York state loan shark act".
   § 2. The general business law is amended by adding a new section 517-a
 to read as follows:
   §  517-A.  MAXIMUM  CREDIT CARD INTEREST RATES. 1. FOR THE PURPOSES OF
 THIS SECTION "ANNUAL PERCENTAGE RATE OF INTEREST" OR "ANNUAL  PERCENTAGE
 RATE"  SHALL MEAN THE ANNUAL PERCENTAGE RATE FOR A LOAN OF CREDIT CALCU-
 LATED ACCORDING TO THE PROVISIONS OF THE FEDERAL TRUTH  IN  LENDING  ACT
 (15  U.S.C.  § 1601, ET SEQ.) AND THE REGULATIONS PROMULGATED THEREUNDER
 BY THE FEDERAL RESERVE BOARD, AS SAID ACT AND  REGULATIONS  ARE  AMENDED
 FROM TIME TO TIME.
   2.  NOTWITHSTANDING ANY OTHER PROVISION OF LAW, BUT EXCEPT AS PROVIDED
 IN SUBDIVISION FOUR OF THIS SECTION, THE ANNUAL PERCENTAGE RATE APPLICA-
 BLE TO ANY EXTENSION OF CREDIT  SHALL  NOT  EXCEED  FIFTEEN  PERCENT  ON
 UNPAID BALANCES, INCLUSIVE OF ALL FINANCE CHARGES.
   3.  ANY FEES THAT ARE NOT CONSIDERED FINANCE CHARGES UNDER SECTION ONE
 HUNDRED SIX OF THE FEDERAL TRUTH IN LENDING ACT (15 U.S.C. §  1605)  MAY
 NOT BE USED TO EVADE THE LIMITATIONS OF SUBDIVISION TWO OF THIS SECTION,
 AND  THE  TOTAL  SUM  OF  SUCH  FEES  MAY NOT EXCEED THE TOTAL AMOUNT OF
 FINANCE CHARGES ASSESSED.
   4. (A) THE SUPERINTENDENT OF FINANCIAL SERVICES MAY ESTABLISH A  MAXI-
 MUM  ANNUAL  PERCENTAGE  RATE  OF INTEREST EXCEEDING THE FIFTEEN PERCENT
 ANNUAL RATE UNDER SUBDIVISION TWO OF  THIS  SECTION  FOR  PERIODS  WHICH
 SHALL NOT EXCEED EIGHTEEN MONTHS, UPON A DETERMINATION THAT:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11766-01-9

 S. 5880                             2
 
   (I)  MONEY  MARKET  INTEREST  RATES  HAVE RISEN OVER THE PRECEDING SIX
 MONTH PERIOD; AND
   (II) PREVAILING INTEREST RATE LEVELS THREATEN THE SAFETY AND SOUNDNESS
 OF  INDIVIDUAL  LENDERS,  AS  EVIDENCED  BY ADVERSE TRENDS IN LIQUIDITY,
 CAPITAL, EARNINGS, AND GROWTH.
   (B) THE LIMITATION IN SUBDIVISION TWO OF THIS SECTION SHALL NOT  APPLY
 WITH RESPECT TO ANY EXTENSION OF CREDIT BY A CREDIT UNION, AS DEFINED BY
 SECTION TWO OF THE BANKING LAW.
   5. (A) KNOWINGLY TAKING, RECEIVING, RESERVING, OR CHARGING OF AN ANNU-
 AL PERCENTAGE RATE OR FEE GREATER THAN THAT PERMITTED BY SUBDIVISION TWO
 OF  THIS  SECTION  SHALL  BE DEEMED A VIOLATION OF THIS SECTION, AND THE
 CREDITOR SHALL BE SUBJECT TO A FORFEITURE OF THE ENTIRE  INTEREST  WHICH
 THE NOTE, BILL, OR OTHER EVIDENCE OF SUCH OBLIGATION CARRIES WITH IT, OR
 WHICH HAS BEEN AGREED TO BE PAID THEREON.
   (B)  IF  AN  ANNUAL PERCENTAGE RATE OR FEE GREATER THAN THAT PERMITTED
 UNDER SUBDIVISION TWO OF THIS SECTION HAS BEEN PAID, THE PERSON BY  WHOM
 IT  HAS  BEEN  PAID, OR THE LEGAL REPRESENTATIVE OF SUCH PERSON, MAY, BY
 BRINGING AN ACTION NOT LATER THAN TWO YEARS AFTER THE DATE ON WHICH  THE
 USURIOUS  COLLECTION  WAS  LAST MADE, RECOVER BACK FROM THE LENDER IN AN
 ACTION OF DEBT, THE ENTIRE AMOUNT OF INTEREST, FINANCE CHARGES, OR  FEES
 PAID.
   6.  ANY  CREDITOR  WHO  VIOLATES  THIS SECTION SHALL BE SUBJECT TO THE
 PROVISIONS OF SECTION FIVE HUNDRED THIRTEEN OF THIS ARTICLE.
   § 3. This act shall take effect on the ninetieth day  after  it  shall
 have  become a law; provided that the provisions of this act shall apply
 to contracts entered into, altered, modified, extended, or renewed on or
 after such effective date. Effective immediately, the  addition,  amend-
 ment and/or repeal of any rule or regulation necessary for the implemen-
 tation  of  this act on its effective date are authorized to be made and
 completed by the superintendent of financial services on or before  such
 effective date.

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Senate Bill S5880

Sponsored By

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2019-S5880 (ACTIVE) - Details

2019-S5880 (ACTIVE) - Summary

2019-S5880 (ACTIVE) - Sponsor Memo

2019-S5880 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S5880

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Sponsored By

James Sanders Jr.

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2019-S5880 (ACTIVE) - Details

2019-S5880 (ACTIVE) - Summary

2019-S5880 (ACTIVE) - Sponsor Memo

2019-S5880 (ACTIVE) - Bill Text download pdf

Comments