Opts the state out of certain provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980, Public Law 96-221

◆ The sponsor's argument

Why Zellnor Myrie says this is needed

New York law generally limits civil interest and treats knowingly charg- ing or receiving more than twenty-five percent without lawful authori- zation as criminal usury. Yet New Yorkers are currently offered consumer credit, including credit cards, at annual percentage rates above twen- ty-five percent through programs involving state-chartered institutions located in jurisdictions permitting higher rates. Those offers are currently lawful under federal law. Section 521 of DIDMCA, codified at 12 U.S.C. § 1831d, permits a federally insured state-chartered institution to invoke specified federal authority based on the law where the bank is located. But Congress included § 525, which expressly permits a state to declare that it does not want that authori- ty to apply to loans made in the state. This bill makes that election for New York. This bill recognizes that remote credit is not made solely at a lender's headquarters. A New York resident may be solicited here, apply and accept here, receive access to credit here, incur the debt here, pay through a New York account, and be serviced and collected from here. The bill therefore provides that a transaction may be made in more than one state and is made in New York when a New York consumer and a material New York transactional act are present. Binding Second Circuit authority likewise recognizes New York's substan- tial interest in remote lending where New York residents apply, receive credit and authorize repayment here (Otoe-Missouria Tribe of Indians v. New York State Department of Financial Services, 769 F.3d 105 (2d Cir. 2014)).

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.