S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  773--A
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  M.  of  A.  ROSENTHAL  --  read once and referred to the
   Committee on Banks --  committee  discharged,  bill  amended,  ordered
   reprinted as amended and recommitted to said committee
 
 AN  ACT  to  amend  the banking law, in relation to the use of automated
   lending decision-making tools to make lending decisions
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The banking law is amended by adding a new section 103-a to
 read as follows:
   §  103-A. USE OF AUTOMATED LENDING DECISION-MAKING TOOLS TO MAKE LEND-
 ING DECISIONS. 1. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING  TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   (A)  "AUTOMATED  LENDING DECISION-MAKING TOOL" MEANS ANY SOFTWARE THAT
 USES ALGORITHMS, COMPUTATIONAL MODELS, OR ARTIFICIAL INTELLIGENCE  TECH-
 NIQUES,  OR  A  COMBINATION  THEREOF,  TO MATERIALLY AUTOMATE OR REPLACE
 HUMAN DECISION-MAKING REGARDING LENDING DECISIONS  THAT  IMPACT  NATURAL
 PERSONS.  "AUTOMATED LENDING DECISION-MAKING TOOL" SHALL NOT INCLUDE ANY
 SOFTWARE USED PRIMARILY FOR BASIC COMPUTERIZED PROCESSES, SUCH AS CALCU-
 LATORS, SPELLCHECK TOOLS, AUTOCORRECT FUNCTIONS, SPREADSHEETS, ELECTRON-
 IC  COMMUNICATIONS, OR ANY TOOL THAT RELATES ONLY TO INTERNAL MANAGEMENT
 AFFAIRS SUCH AS ORDERING OFFICE SUPPLIES  OR  PROCESSING  PAYMENTS,  AND
 THAT  DO NOT MATERIALLY IMPACT ANY LENDING DECISIONS RELATING TO NATURAL
 PERSONS.
   (B) "LENDING DECISION" MEANS ANY DETERMINATION MADE BY A COVERED ENTI-
 TY OR ITS AGENT, WHETHER AUTOMATED, MANUAL  OR  A  COMBINATION  THEREOF,
 THAT  AFFECTS THE APPROVAL, DENIAL, OFFER, COUNTEROFFER, OR MODIFICATION
 OF THE TERMS OR CONDITIONS OF A LOAN OR  CREDIT  APPLICATION,  INCLUDING
 DECISIONS  REGARDING  CREDITWORTHINESS,  LOAN  AMOUNTS,  INTEREST RATES,
 COLLATERAL REQUIREMENTS, REPAYMENT, OR ANY OTHER MATERIAL TERM, AND  ANY
 DETERMINATION  THAT  CONSIDERS  ANY FACTOR THAT RESULTS OR MAY RESULT IN
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD02503-02-5
 A. 773--A                           2
 
 "ADVERSE ACTION" AS SUCH TERM IS DEFINED  IN  THE  FEDERAL  FAIR  CREDIT
 REPORTING ACT 15 U.S.C.  1681A(K).
   (C)  "COVERED  ENTITY" MEANS ANY BANKING ORGANIZATION, FOREIGN BANKING
 CORPORATION LICENSED BY THE SUPERINTENDENT TO TRANSACT BUSINESS IN  THIS
 STATE  PURSUANT  TO  ARTICLE  FIVE  OF  THIS  CHAPTER, INTERSTATE BRANCH
 AUTHORIZED BY THE SUPERINTENDENT TO  TRANSACT  BUSINESS  IN  THIS  STATE
 PURSUANT TO ARTICLE FIVE-C OF THIS CHAPTER, AND LICENSED LENDER. COVERED
 ENTITY SHALL NOT INCLUDE ANY NATIONAL BANK, FEDERAL SAVINGS BANK, FEDER-
 AL  SAVINGS  AND  LOAN  ASSOCIATION, FEDERAL CREDIT UNION, FEDERAL TRUST
 COMPANY OR FOREIGN BANKING CORPORATION ORGANIZED UNDER THE LAWS  OF  THE
 UNITED STATES.
   (D)  "MATERIAL  CHANGE" MEANS ANY MODIFICATION TO AN AUTOMATED LENDING
 DECISION-MAKING TOOL WHICH DIRECTLY IMPACTS THE TOOL'S OUTPUTS.
   2. NO LESS THAN ANNUALLY, EACH  COVERED  ENTITY  THAT  USES  AUTOMATED
 LENDING   DECISION-MAKING  TOOLS  SHALL  CONDUCT  AN  IMPACT  ASSESSMENT
 SUBSTANTIALLY COMPLETED AND BEARING THE SIGNATURE OF ONE OR  MORE  INDI-
 VIDUALS  RESPONSIBLE FOR MEANINGFUL HUMAN REVIEW FOR THE LAWFUL APPLICA-
 TION AND USE OF SUCH AUTOMATED LENDING DECISION-MAKING TOOLS. AN  IMPACT
 ASSESSMENT  SHALL BE CONDUCTED PRIOR TO ANY MATERIAL CHANGE TO ANY AUTO-
 MATED LENDING DECISION-MAKING TOOL THAT MAY CHANGE THE OUTCOME OR EFFECT
 OF SUCH TOOL.  AN IMPACT ASSESSMENT FINAL REPORT SUMMARIZING THE CONCLU-
 SIONS OF THE INITIAL IMPACT ASSESSMENT SHALL BE POSTED ON  SUCH  COVERED
 ENTITY'S  WEBSITE  PRIOR TO THE IMPLEMENTATION AND USE OF SUCH AUTOMATED
 LENDING DECISION-MAKING TOOL AND UPDATED ON THE ENTITY'S WEBSITE FOLLOW-
 ING EACH SUBSEQUENT ASSESSMENT.  SUCH  IMPACT  ASSESSMENT  FINAL  REPORT
 SHALL INCLUDE:
   (A)  A  DESCRIPTION  OF  THE OBJECTIVES OF THE AUTOMATED LENDING DECI-
 SION-MAKING TOOL;
   (B) AN EVALUATION OF THE ABILITY OF THE  AUTOMATED  LENDING  DECISION-
 MAKING TOOL TO ACHIEVE ITS STATED OBJECTIVES;
   (C) A DESCRIPTION AND EVALUATION OF THE OBJECTIVES AND DEVELOPMENT  OF
 THE AUTOMATED LENDING DECISION-MAKING TOOL INCLUDING:
   (I)  A  SUMMARY OF THE UNDERLYING ALGORITHMS, COMPUTATIONAL MODES, AND
 ARTIFICIAL INTELLIGENCE TOOLS THAT ARE USED WITHIN  THE AUTOMATED  LEND-
 ING DECISION-MAKING TOOL; AND
   (II)  THE DESIGN AND TRAINING DATA USED TO DEVELOP THE AUTOMATED LEND-
 ING DECISION-MAKING TOOL PROCESS;
   (D) TESTING FOR:
   (I) ACCURACY, FAIRNESS, BIAS AND DISCRIMINATION, AND AN ASSESSMENT  OF
 WHETHER  THE  USE OF THE AUTOMATED LENDING DECISION-MAKING TOOL PRODUCES
 DISCRIMINATORY RESULTS ON THE BASIS  OF  A  CONSUMER'S  OR  A  CLASS  OF
 CONSUMERS'   ACTUAL  OR  PERCEIVED  RACE,  COLOR,  ETHNICITY,  RELIGION,
 NATIONAL ORIGIN, SEX, GENDER, GENDER IDENTITY, SEXUAL ORIENTATION, FAMI-
 LIAL STATUS, BIOMETRIC INFORMATION, LAWFUL SOURCE  OF  INCOME,  AGE,  OR
 DISABILITY  AND,  OUTLINES  MITIGATIONS  FOR  ANY IDENTIFIED PERFORMANCE
 DIFFERENCES IN OUTCOMES ACROSS RELEVANT GROUPS IMPACTED BY SUCH USE;
   (II) ANY CYBERSECURITY VULNERABILITIES  AND  PRIVACY  RISKS  RESULTING
 FROM  THE  DEPLOYMENT  AND  USE OF THE AUTOMATED LENDING DECISION-MAKING
 TOOL, AND THE DEVELOPMENT OR EXISTENCE OF  SAFEGUARDS  TO  MITIGATE  THE
 RISKS;
   (III) ANY PUBLIC HEALTH OR SAFETY RISKS RESULTING FROM THE  DEPLOYMENT
 AND USE OF THE AUTOMATED LENDING DECISION-MAKING TOOL; AND
   (IV)  ANY REASONABLY FORESEEABLE MISUSE OF THE AUTOMATED LENDING DECI-
 SION-MAKING TOOL AND THE DEVELOPMENT OR    EXISTENCE    OF    SAFEGUARDS
 AGAINST SUCH MISUSE;
 A. 773--A                           3
 
   (E)  THE EXTENT TO WHICH THE DEPLOYMENT AND USE OF THE AUTOMATED LEND-
 ING DECISION-MAKING TOOL REQUIRES INPUT OF  SENSITIVE    AND    PERSONAL
 DATA,  HOW   THAT   DATA   IS USED AND STORED, AND ANY CONTROL USERS MAY
 HAVE OVER THEIR DATA; AND
   (F) THE NOTIFICATION MECHANISM OR PROCEDURE, IF ANY, BY WHICH INDIVID-
 UALS  IMPACTED BY THE UTILIZATION OF THE AUTOMATED LENDING DECISION-MAK-
 ING TOOL MAY BE NOTIFIED OF THE USE OF SUCH AUTOMATED LENDING  DECISION-
 MAKING  TOOL  AND  OF THE INDIVIDUAL'S PERSONAL  DATA,  AND INFORMED  OF
 THEIR RIGHTS AND OPTIONS RELATING TO SUCH USE.
   3. IN ADDITION TO THE POWERS CONFERRED TO THE SUPERINTENDENT IN SUBDI-
 VISION SIX OF THIS SECTION, A  COVERED  ENTITY  SHALL  RETAIN  THE  FULL
 IMPACT  ASSESSMENT  AND  SUMMARY  FOR A PERIOD OF SEVEN YEARS AND SHALL,
 UPON NOTICE BY THE SUPERINTENDENT,  PROVIDE  SUCH  FULL  ASSESSMENT  AND
 SUMMARY TO THE DEPARTMENT WITHIN SEVEN DAYS.
   4. NOTWITHSTANDING THE PROVISIONS OF THIS ARTICLE OR ANY OTHER LAW, IF
 AN  IMPACT  ASSESSMENT  FINDS THAT THE AUTOMATED LENDING DECISION-MAKING
 TOOL PRODUCES DISCRIMINATORY OR BIASED  OUTCOMES,  SUCH  COVERED  ENTITY
 SHALL,  WITHIN THIRTY DAYS OF SUCH FINDINGS, REPORT SUCH FINDINGS TO THE
 DEPARTMENT. UPON SUCH REPORT  BEING  RECEIVED  BY  THE  DEPARTMENT,  THE
 DEPARTMENT  SHALL  DIRECT  SUCH COVERED ENTITY TO CEASE ANY UTILIZATION,
 APPLICATION, OR FUNCTION OF SUCH AUTOMATED LENDING DECISION-MAKING TOOL,
 AND  OF ANY INFORMATION PRODUCED USING SUCH TOOL.
   5. (A) ANY COVERED ENTITY THAT USES AN AUTOMATED LENDING DECISION-MAK-
 ING TOOL TO SCREEN APPLICANTS FOR A LOAN SHALL NOTIFY EACH  SUCH  APPLI-
 CANT OF THE FOLLOWING:
   (I)  THAT  AN  AUTOMATED  LENDING DECISION-MAKING TOOL WILL BE USED IN
 CONNECTION WITH THE ASSESSMENT OR EVALUATION OF SUCH APPLICANT;
   (II) THE CRITERIA THAT SUCH  AUTOMATED  LENDING  DECISION-MAKING  TOOL
 WILL USE IN THE ASSESSMENT OF SUCH APPLICANT;
   (III)  INFORMATION ABOUT THE TYPE OF DATA COLLECTED FOR SUCH AUTOMATED
 LENDING DECISION-MAKING TOOL, THE SOURCE OF SUCH DATA, AND  THE  COVERED
 ENTITY'S DATA RETENTION POLICY; AND
   (IV)  IF  AN APPLICATION FOR A LOAN IS DENIED THROUGH USE OF THE AUTO-
 MATED LENDING DECISION-MAKING  TOOL,  TO  THE  EXTENT  PRACTICABLE,  THE
 REASON FOR SUCH DENIAL.
   (B)  THE  NOTICE  REQUIRED BY PARAGRAPH (A), WITH THE EXCEPTION OF THE
 INFORMATION REQUIRED IN SUBPARAGRAPH (IV) OF  SUCH  PARAGRAPH,  OF  THIS
 SUBDIVISION  SHALL BE MADE NO LESS THAN TWENTY-FOUR HOURS BEFORE THE USE
 OF SUCH AUTOMATED LENDING DECISION-MAKING TOOL. THE NOTICE  REQUIRED  BY
 SUBPARAGRAPH (IV) OF SUCH PARAGRAPH (A) SHALL BE MADE WITHIN TWENTY-FOUR
 HOURS AFTER SUCH DENIAL.
   (C)  IF AN APPLICATION FOR A LOAN IS DENIED BASED ON PERSONAL INFORMA-
 TION THAT IS INCORRECT,  THE  APPLICANT,  UPON  RECEIPT  OF  THE  NOTICE
 REQUIRED  BY  SUBPARAGRAPH  (IV)  OF  PARAGRAPH (A) OF THIS SUBDIVISION,
 SHALL HAVE THIRTY DAYS TO  CORRECT  SUCH  INFORMATION  AND  APPEAL  SUCH
 DENIAL.
   6. THE SUPERINTENDENT SHALL HAVE THE POWER TO MAKE SUCH INVESTIGATIONS
 AS  THE  SUPERINTENDENT DEEMS NECESSARY TO DETERMINE WHETHER ANY COVERED
 ENTITY HAS VIOLATED ANY OF THE PROVISIONS OF THIS SECTION. TO THE EXTENT
 NECESSARY THEREFOR, THE SUPERINTENDENT MAY REQUIRE THE ATTENDANCE OF AND
 EXAMINE ANY PERSON UNDER OATH, AND SHALL HAVE THE POWER  TO  COMPEL  THE
 PRODUCTION  OF ALL RELEVANT BOOKS, RECORDS, ACCOUNTS, AND DOCUMENTS. THE
 SUPERINTENDENT SHALL HAVE THE POWER TO MAKE  SUCH  EXAMINATIONS  OF  THE
 BOOKS,  RECORDS,  ACCOUNTS  AND  DOCUMENTS  USED  IN THE BUSINESS OF ANY
 COVERED ENTITY AS THE SUPERINTENDENT DEEMS NECESSARY TO DETERMINE WHETH-
 ER ANY SUCH COVERED ENTITY HAS VIOLATED ANY OF THE  PROVISIONS  OF  THIS
 A. 773--A                           4
 
 SECTION,  OR  TO SECURE INFORMATION LAWFULLY REQUIRED BY THE SUPERINTEN-
 DENT.
   7.  NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION TWO OF THIS SECTION,
 THE SUPERINTENDENT MAY,  UPON  A  FINDING  THAT  A  COVERED  ENTITY  HAS
 DEPLOYED  AN  AUTOMATED  LENDING  DECISION-MAKING  TOOL  WHICH  PRODUCED
 DISCRIMINATORY OR BIASED OUTCOMES, REQUIRE, IN ACCORDANCE WITH THE RULES
 AND REGULATIONS PROMULGATED BY THE SUPERINTENDENT, (A) ADDITIONAL ANNUAL
 REPORTS, (B) ANNUAL REPORTS WITH ADDITIONAL INFORMATION, (C) A  COMBINA-
 TION OF PARAGRAPHS (A) AND (B) OF THIS SUBDIVISION, AND/OR (D) THAT SUCH
 COVERED  ENTITY PROVIDE ANY AND ALL ADDITIONAL REPORTS TO THE DEPARTMENT
 DIRECTLY.
   8. THE PROVISIONS OF THIS SECTION  SHALL  BE  SEVERABLE,  AND  IF  ANY
 PHRASE,  CLAUSE, SENTENCE, OR PROVISION IS DECLARED TO BE INVALID, OR IS
 PREEMPTED BY FEDERAL LAW OR REGULATION, THE VALIDITY OF THE REMAINDER OF
 THIS SECTION SHALL NOT BE AFFECTED THEREBY. IF  ANY  PROVISION  OF  THIS
 SECTION, OR ITS APPLICATION TO ANY PERSON OR CIRCUMSTANCE, IS HELD TO BE
 INVALID  OR  PREEMPTED BY FEDERAL LAW, THE REMAINDER OF THIS SECTION AND
 ITS APPLICATION TO OTHER PERSONS OR CIRCUMSTANCES SHALL NOT BE  AFFECTED
 AND  SHALL  CONTINUE  IN  FULL  FORCE  AND  EFFECT TO THE MAXIMUM EXTENT
 PERMITTED BY LAW.
   § 2. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.