Friday's News

May 10, 2019

NYBA held its annual Albany Visit this week, as a slew of banking bills made their way onto next week’s committee agendas. Next week, the focus will be on preparing for a critical hearing on public deposits and a statewide grassroots campaign on the issue. In Washington, an overhaul of anti-money laundering rules advanced in the House Financial Services Committee.

NYBA Grassroots Alert

On Monday, May 20 at 10:00 a.m., the New York State Assembly Standing Committees on Banks and Local Governments will hold a public hearing on the impact of authorizing credit unions to accept state and municipal deposits. NYBA has recruited an expert panel of community bank CEOs to provide testimony, along with NYBA President & CEO Mike Smith. NYBA must bolster this effort with a sustained campaign of legislative contacts and attendance at the hearing. Please watch your emails in the coming days for details, and be prepared to engage.

State Legislative Developments

• NYBA held its annual Albany Visit this week to discuss issues facing the industry this legislative session. The successful visit featured speaking engagements by top state officials, including State Comptroller Tom DiNapoli and Acting Superintendent  of the Department of Financial Services Linda Lacewell, as well as Senate Banks Committee Chairman James Sanders Jr., Assembly Banks Committee Chairman Kenneth Zebrowski, Senate Minority Leader John Flanagan, and Assembly Minority Leader Brian Kolb. Some of the issues discussed during the forum included: municipal deposits, credit unions and CRA equity, as well as power of attorney reform, privacy and cybersecurity, and the continuation of the wildcard statute.
• The Legislature had one of its busiest weeks, moving over 220 bills through various committees. Among the bills introduced this week:

• S.5565 (Sanders), would allow municipalities to create public banks in the State of New York. There is currently no same as in the Assembly. NYBA opposes this bill.
• A.7580 (Mosley)/S.5433 (Benjamin), would prohibit state chartered banks, including a state branch or agency of a foreign banking corporation, from investing in and providing financing for private prisons.
• S.5642 (Thomas), would enact the “NY Privacy Act” to require companies to disclose their methods of de-identifying personal information, to place special safeguards around data sharing and to allow consumers to obtain the names of all entities with whom their information is shared. This bill is broader than the California privacy bill, as it includes a data fiduciary standard and private right of action. There is currently no sponsor in the Assembly. NYBA opposes the bill, and supports a bipartisan commissioned study to assess the impact of these types of proposals.
• A.7500 (Dinowitz), introduced at the request of the Office of Court Administration, seeks to correct  the abuse of confessions of judgment by creditors without frustrating the legitimate use of confessions of judgment, particularly in the context of litigation.
• A.7513 (Perry)/S.2105 (Sanders), would require a single point of contact for modifying delinquent mortgage loans.
• A.7454 (Kim)/S.1659 (Skoufis), creates a tax on companies subject to SEC pay ratio reporting requirements at the rate of 10% if the company reports that the CEO makes one hundred times the median pay of all their workers, and at the rate of 25% if the company reports that the CEO makes two hundred fifty times the median pay of all their workers.
• Among the bills on committee agendas next week: 
• On the Assembly Consumer Affairs & Protection Committee agenda:
•  A.2611-B (Dinowitz)/S.2884-B (Sanders), would prohibit the disclosure or use of consumer credit history in hiring, employment and licensing determinations. This bill is currently on the floor in the Senate.
•  A.5294 (Crespo)/S.2302 (Kavanagh), would prohibit a consumer reporting agency or lender from using the credit scores of members of an individual's social network to determine the credit worthiness of such individual. This bill is currently on the floor in the Senate.
• Among the bills that moved this week:

A.1772 (Peoples-Stokes)/S.3227 (Sanders), which requires inclusion and explanation of additional non-public CRA data, passed the Senate Banks Committee and was reported to the Senate floor. NYBA strongly opposes this bill, as it can expose to public scrutiny a bank’s non-public information, revealing both bank and customer private information, and seriously threatening the safety and soundness New York State chartered banks, resulting in harm to both business and customers. 

A.5622 (Weinstein)/S.4236 (Hoylman), which would enact the Uniform Voidable Transactions Act to modernize New York’s creditor laws, has now passed the Senate and Assembly. This bill will now be sent to the Governor for his signature.

A.1931 (Zebrowski)/S.982 (Breslin), which would require that every banking institution maintaining checking accounts for customers shall pay checks in the order received within the account balance, passed the Assembly Banks Committee. NYBA opposes this legislation.

A.1940 (Zebrowski)/ S.2245 (Sanders), which would increase the number of withdrawal transactions allowed in basic banking accounts for account holders sixty-five years of age or older from eight to twelve transactions at no additional cost, passed the Assembly Banks Committee. This bill is currently on the floor in both the Senate and Assembly.

A.5635 (DenDekker)/S.5575 (Thomas), introduced at the request of the Attorney General, passed the Assembly Codes Committee. This bill aims to expand the current data breach notification requirements to include biometric data, credit and debit cards, and emails with passwords/security questions, but includes a limited exemption for banks who notify of breaches under the federal Gramm-Leach-Bliley Act to avoid duplicate obligations.

A.5619 (Weinstein)/S.5160 (Kavanagh), a bill which NYBA strongly opposes, passed the Senate Housing Committee. This bill would provide that a defense of lack of standing in a foreclosure action is not waived because of the defendant’s failure to raise such a defense in his or her responsive pleading.  NYBA opposes the bill because it would create a new procedural rule that would only apply in foreclosure cases, which is not available to any other defendant in any other proceeding in New York courts. This bill is currently on the Assembly floor.

Federal Legislative Developments

• The House Financial Services Committee approved H.R. 2514, a bill to modernize the federal anti-money laundering (AML) and Bank Secrecy Act landscape. The bill allows banks and law enforcement agencies to better share information. A related bill to create a secure beneficial ownership registry of legal entities to help curb the use of shell companies was set aside so that lawmakers are able to build more bipartisan support. The beneficial ownership bill, strongly supported by NYBA, is sponsored by New York Congresswoman Carolyn Maloney (D-Manhattan).
• A bipartisan group of 30 State Attorneys General, including New York’s, wrote to Congressional leaders in support of the SAFE Banking Act – urging regulatory clarity for banking institutions seeking to serve marijuana-related businesses where the business is legal.
• The SEC voted to advance a proposal to exempt smaller companies from some of the outside audit requirements of Sarbanes-Oxley, that were put in place after the Enron and WorldCom accounting scandals. The measure would apply to firms with less than $100 million in annual revenue.

• The Federal Housing Administration issued a proposal designed to encourage greater bank participation in the FHA program, in particular, for lower-income and first time homebuyers. The plan makes changes to the single-family and lender-level certifications. It also attempts to better align language in the statute and FHA policy. The Administration is also considering making permanent its single-family loan sale program and is seeking public comments.

Federal Regulatory Developments

• The CFPB issued a proposal it hopes will modernize and clarify rules around third-party debt collection. The measure, issued under the Fair Debt Collection Pratices Act, addresses communications such as mobile phones, text messages, email and social media and how they may be or may not be used to collect debts.
• The Federal Reserve is considering extending the daily operating hours of the National Settlement Service and Fedwire Funds Service to facilitate adoption of a third same-day ACH processing and settlement window. The central bank is seeking public comment on the proposal.

Resources

The OCC has updated its Comptroller’s Handbook to reflect change’s to the CFPB’s mortgage servicing rule, which is now in effect

Questions?
Contact Mike Smith at (212) 297-1699 or msmith@nyba.com, or Clare Cusack at (212) 297-1664 or ccusack@nyba.com.
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Questions?