S T A T E O F N E W Y O R K
________________________________________________________________________
8319
2025-2026 Regular Sessions
I N A S S E M B L Y
May 13, 2025
___________
Introduced by M. of A. ROSENTHAL -- read once and referred to the
Committee on Banks
AN ACT to amend the banking law, in relation to limits on overdraft fees
charged by certain state chartered banking institutions
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subparagraph ii of paragraph (a) of subdivision 2 and
subdivision 3 of section 9-y of the banking law, subparagraph ii of
paragraph (a) of subdivision 2 as added and subdivision 3 as amended by
chapter 556 of the laws of 2023, are amended to read as follows:
ii. the charges that may be imposed in connection with a check drawn
or other written order upon, or electronic transfer sought to be effec-
tuated against, insufficient funds or uncollected balances in a consumer
account, whether or not the banking organization pays such check, writ-
ten order, or electronic transfer; PROVIDED, HOWEVER, THAT FOR A BANKING
ORGANIZATION THAT IS A STATE CHARTERED BANKING INSTITUTION SUBJECT TO
SECTION NINE-Q OF THIS ARTICLE, SUCH CHARGES SHALL NOT EXCEED THE GREAT-
ER OF FIVE DOLLARS OR THE PRO RATA SHARE OF SUCH BANKING ORGANIZATION'S
TOTAL DIRECT COSTS AND CHARGE-OFF LOSSES FOR PROVIDING NON-COVERED OVER-
DRAFT CREDIT IN THE PREVIOUS YEAR, CALCULATED IN ACCORDANCE WITH SECTION
NINE-Q OF THIS ARTICLE;
3. [Definition] DEFINITIONS. As used in this section[,]: (A)
"[consumer] CONSUMER accounts" means accounts at banking organizations
established by natural persons primarily for personal, family or house-
hold purposes.
(B) "NON-COVERED OVERDRAFT CREDIT" MEANS OVERDRAFT CREDIT THAT IS NOT
SUBJECT TO THE FEDERAL TRUTH IN LENDING ACT, REGULATION Z, 12 C.F.R. §
1026.22.
(C) "OVERDRAFT CREDIT" MEANS ANY CONSUMER CREDIT EXTENDED BY A BANKING
ORGANIZATION TO PAY A TRANSACTION FROM A CHECKING OR OTHER TRANSACTION
ACCOUNT, OTHER THAN A PREPAID ACCOUNT AS SUCH TERM IS DEFINED IN 12
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11634-01-5
A. 8319 2
C.F.R. § 1026.61, HELD AT THE BANKING ORGANIZATION WHERE THE CUSTOMER
HAS INSUFFICIENT OR UNAVAILABLE FUNDS IN SUCH ACCOUNT. THE TERM "OVER-
DRAFT CREDIT" INCLUDES, BUT IS NOT LIMITED TO, ANY SUCH CUSTOMER CREDIT
EXTENDED THROUGH A TRANSFER FROM A CREDIT CARD ACCOUNT OR OVERDRAFT.
§ 2. Paragraph (a) of subdivision 8 of section 108 of the banking law,
as amended by chapter 155 of the laws of 2012, is amended and a new
paragraph (e) is added to read as follows:
(a) The superintendent shall have the power to prescribe by regulation
(i) the maximum charge which may be imposed in this state by a bank or
trust company in connection with a check or other written order drawn
upon it on insufficient funds, irrespective of whether the instrument is
paid, accepted, or returned by the bank, PROVIDED, HOWEVER, THAT SUCH
MAXIMUM CHARGE SHALL NOT EXCEED THE GREATER OF FIVE DOLLARS OR THE PRO
RATA SHARE OF SUCH BANK'S OR TRUST COMPANY'S TOTAL DIRECT COSTS AND
CHARGE-OFF LOSSES FOR PROVIDING NON-COVERED OVERDRAFT CREDIT IN THE
PREVIOUS YEAR, CALCULATED IN ACCORDANCE SECTION NINE-Q OF THIS CHAPTER,
and (ii) the maximum charge which may be imposed in this state by a bank
or trust company in connection with a check or other written order
received by it for deposit or collection and subsequently dishonored and
returned for any reason by the drawee.
(E) FOR PURPOSES OF THIS SUBDIVISION (I) "NON-COVERED OVERDRAFT CRED-
IT" MEANS OVERDRAFT CREDIT THAT IS NOT SUBJECT TO THE FEDERAL TRUTH IN
LENDING ACT, REGULATION Z, 12 C.F.R. § 1026.22, AND (II) "OVERDRAFT
CREDIT" MEANS ANY CONSUMER CREDIT EXTENDED BY A BANKING ORGANIZATION TO
PAY A TRANSACTION FROM A CHECKING OR OTHER TRANSACTION ACCOUNT, OTHER
THAN A PREPAID ACCOUNT AS SUCH TERM IS DEFINED IN 12 C.F.R. § 1026.61,
HELD AT THE BANKING ORGANIZATION WHERE THE CUSTOMER HAS INSUFFICIENT OR
UNAVAILABLE FUNDS IN SUCH ACCOUNT. THE TERM "OVERDRAFT CREDIT" INCLUDES,
BUT IS NOT LIMITED TO, ANY SUCH CUSTOMER CREDIT EXTENDED THROUGH A
TRANSFER FROM A CREDIT CARD ACCOUNT OR OVERDRAFT.
§ 3. Section 235-c of the banking law, as added by chapter 361 of the
laws of 1984 and as further amended by section 104 of part A of chapter
62 of the laws of 2011, is amended to read as follows:
§ 235-c. Regulation of certain charges. 1. The superintendent of
financial services shall have the power to prescribe by regulation (i)
the maximum charge which may be imposed in this state by a savings bank
in connection with a check or other written order drawn upon it on
insufficient funds, irrespective of whether the instrument is paid,
accepted or returned by the bank, PROVIDED, HOWEVER, THAT SUCH MAXIMUM
CHARGE SHALL NOT EXCEED THE GREATER OF FIVE DOLLARS OR THE PRO RATA
SHARE OF SUCH SAVINGS BANK'S TOTAL DIRECT COSTS AND CHARGE-OFF LOSSES
FOR PROVIDING NON-COVERED OVERDRAFT CREDIT IN THE PREVIOUS YEAR, CALCU-
LATED IN ACCORDANCE WITH SECTION NINE-Q OF THIS CHAPTER, and (ii) the
maximum charge which may be imposed in this state by a savings bank in
connection with a check or other written order received by it for depos-
it or collection and subsequently dishonored and returned for any reason
by the drawee.
2. FOR PURPOSES OF THIS SECTION (I) THE TERM "NON-COVERED OVERDRAFT
CREDIT" MEANS OVERDRAFT CREDIT THAT IS NOT SUBJECT TO THE FEDERAL TRUTH
IN LENDING ACT, REGULATION Z, 12 C.F.R. § 1026.22, AND (II) THE TERM
"OVERDRAFT CREDIT" MEANS ANY CONSUMER CREDIT EXTENDED BY A BANKING
ORGANIZATION TO PAY A TRANSACTION FROM A CHECKING OR OTHER TRANSACTION
ACCOUNT, OTHER THAN A PREPAID ACCOUNT AS SUCH TERM IS DEFINED IN 12
C.F.R. § 1026.61, HELD AT THE BANKING ORGANIZATION WHERE THE CUSTOMER
HAS INSUFFICIENT OR UNAVAILABLE FUNDS IN SUCH ACCOUNT. THE TERM "OVER-
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DRAFT CREDIT" INCLUDES, BUT IS NOT LIMITED TO, ANY SUCH CUSTOMER CREDIT
EXTENDED THROUGH A TRANSFER FROM A CREDIT CARD ACCOUNT OR OVERDRAFT.
§ 4. Subdivision 13 of section 383 of the banking law, as amended by
chapter 63 of the laws of 1992 and as further amended by section 104 of
part A of chapter 62 of the laws of 2011, is amended to read as follows:
13. A. To receive and repay demand deposits subject to those
provisions applicable to such deposits, in the case of savings banks
under section two hundred thirty-seven of this chapter, including,
subject to regulation by the superintendent of financial services, the
power to charge for maintaining a demand deposit account or for honoring
checks drawn on or accepting deposits made to such an account.
B. The superintendent of financial services shall have the power to
prescribe by regulation [(a)] (I) the maximum charge which may be
imposed in this state by a savings and loan association in connection
with a check or other written order drawn upon it on insufficient funds,
irrespective of whether the instrument is paid, accepted or returned by
the bank, PROVIDED, HOWEVER, THAT SUCH MAXIMUM CHARGE SHALL NOT EXCEED
THE GREATER OF FIVE DOLLARS OR THE PRO RATA SHARE OF SUCH SAVINGS AND
LOAN ASSOCIATION'S DIRECT COSTS AND CHARGE-OFF LOSSES FOR PROVIDING
NON-COVERED OVERDRAFT CREDIT IN THE PREVIOUS YEAR, CALCULATED IN ACCORD-
ANCE WITH SECTION NINE-Q OF THIS CHAPTER, and [(b)] (II) the maximum
charge which may be imposed in this state by a savings and loan associ-
ation in connection with a check or other written order received by it
for deposit or collection and subsequently dishonored and returned for
any reason by the drawee.
C. FOR PURPOSES OF THIS SUBDIVISION (I) THE TERM "NON-COVERED OVER-
DRAFT CREDIT" MEANS OVERDRAFT CREDIT THAT IS NOT SUBJECT TO THE FEDERAL
TRUTH IN LENDING ACT, REGULATION Z, 12 C.F.R. § 1026.22, AND (II) THE
TERM "OVERDRAFT CREDIT" MEANS ANY CONSUMER CREDIT EXTENDED BY A BANKING
ORGANIZATION TO PAY A TRANSACTION FROM A CHECKING OR OTHER TRANSACTION
ACCOUNT, OTHER THAN A PREPAID ACCOUNT AS SUCH TERM IS DEFINED IN 12
C.F.R. § 1026.61, HELD AT THE BANKING ORGANIZATION WHERE THE CUSTOMER
HAS INSUFFICIENT OR UNAVAILABLE FUNDS IN SUCH ACCOUNT. THE TERM "OVER-
DRAFT CREDIT" INCLUDES, BUT IS NOT LIMITED TO, ANY SUCH CUSTOMER CREDIT
EXTENDED THROUGH A TRANSFER FROM A CREDIT CARD ACCOUNT OR OVERDRAFT.
§ 5. The banking law is amended by adding a new section 9-q to read as
follows:
§ 9-Q. OVERDRAFT CREDIT COST AND LOSS CALCULATION. 1. FOR PURPOSES OF
THIS SECTION:
(A) "STATE CHARTERED BANKING INSTITUTION" SHALL MEAN ANY BANK, TRUST
COMPANY, PRIVATE BANKER, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION,
FOREIGN BANKING CORPORATION, OR CREDIT UNION.
(B) "PREVIOUS YEAR" SHALL MEAN A PERIOD THAT ENCOMPASSES, AT THE
STATE-CHARTERED BANKING INSTITUTION'S OPTION, ANY OF THE FOLLOWING PERI-
ODS:
(I) THE PRIOR CALENDAR YEAR;
(II) ANY THREE HUNDRED SIXTY-FIVE-DAY PERIOD THAT BEGINS WITHIN THE
PRIOR CALENDAR YEAR;
(III) THE PRIOR FOUR FINANCIAL QUARTERS; OR
(IV) THE STATE CHARTERED BANKING INSTITUTION'S PRIOR ACCOUNTING YEAR.
2. WHEN CALCULATING THE PRO RATA SHARE OF A STATE CHARTERED BANKING
INSTITUTION'S TOTAL DIRECT COSTS AND CHARGE-OFF LOSSES FOR PROVIDING
NON-COVERED OVERDRAFT CREDIT IN THE PREVIOUS YEAR, SUCH STATE CHARTERED
BANKING INSTITUTION SHALL CONSIDER ONLY THOSE COSTS AND CHARGE-OFF LOSS-
ES SPECIFICALLY TRACEABLE TO ITS PROVISION OF NON-COVERED OVERDRAFT
CREDIT IN THE PREVIOUS YEAR. SUCH COSTS AND CHARGE-OFF LOSSES INCLUDE,
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BUT ARE NOT LIMITED TO, ITS COST OF FUNDS, ITS NET CHARGE-OFF LOSSES,
AND OPERATING EXPENSES FOR ITS NON-COVERED OVERDRAFT CREDIT PROGRAM.
SUCH COSTS AND CHARGE-OFF LOSSES SHALL NOT INCLUDE GENERAL OVERHEAD
COSTS OR CHARGE-OFF LOSSES DUE TO UNAUTHORIZED USE, ELECTRONIC FUND
TRANSFER ERRORS, BILLING ERRORS, RETURNED DEPOSIT ITEMS, OR RESCINDED
PROVISIONAL CREDIT.
3. A COST OR CHARGE-OFF LOSS IS SPECIFICALLY TRACEABLE IF IT HAS A
DIRECT RELATIONSHIP TO THE PROVISION OF NON-COVERED OVERDRAFT SERVICES
AND THE STATE CHARTERED BANKING INSTITUTION CAN PROVIDE EVIDENCE TO
DEMONSTRATE SUCH DIRECT RELATIONSHIP.
4. A CHARGE OR COMBINATION OF CHARGES INCLUDES ALL REVENUE RECEIVED IN
CONNECTION WITH AN OVERDRAFT TRANSACTION, INCLUDING, BUT NOT LIMITED TO,
ANY EXTENDED OR SUSTAINED OVERDRAFT FEES, ANY INTEREST CHARGES ON
OUTSTANDING OVERDRAFT BALANCES, AND ANY OTHER PAYMENTS THE STATE CHAR-
TERED BANKING INSTITUTION RECEIVES IN CONNECTION WITH AN OVERDRAFT TRAN-
SACTION.
5. WHEN CALCULATING THE PRO RATA SHARE OF ITS TOTAL DIRECT COSTS AND
CHARGE-OFF LOSSES FOR PROVIDING NON-COVERED OVERDRAFT CREDIT IN THE
PREVIOUS YEAR, A STATE CHARTERED BANKING INSTITUTION SHALL INCLUDE ALL
NON-COVERED OVERDRAFT TRANSACTIONS FROM THE PREVIOUS YEAR IN ITS CALCU-
LATION.
§ 6. This act shall take effect immediately.