Friday's News

January 21, 2022

This week, Governor Hochul released her first proposed Executive Budget – a key element of the State Legislative budget process. In Washington, lawmakers primarily focused on non-banking issues, but the Federal Reserve released a long-awaited paper on a Central Bank Digital Currency (CBDC).

State Legislative Developments

• Earlier this week, Governor Hochul presented her Executive Budget Proposal, which is the first step in the long process of negotiating a State budget. Consistent with a preview she offered earlier this month, the Governor’s proposal contains few, if any, items specifically directed at the State’s banking sector. The State Budget is due to be finalized on April 1st, and both houses of the legislature will likely release their budget proposals sometime in March.  NYBA will continue to analyze the proposals and update members on the process.
  
  
• Both the Senate and Assembly Banks Committee convened for the first time this legislative session this week, taking up bills with a long history of passage through their respective committees.  Among them:
  • In the Senate: S.134 (Mayer)/A.240 (Zebrowski), which establishes certain limitations on bank accounts after the account has been closed and S.166B (Gianaris), which requires transmitters of money to provide a certain warning to consumers.

     

  • In the Assembly: A.8771 (Perry)/S.7793 (Sanders) is a modification to a bill signed into law last session requires creditors to provide a single point of contact to borrowers in the foreclosure process. The bill went on to pass the Assembly this week and is expected to pass the Senate as well.

     

• Among other bills that moved this week: 
  • S.7780 (Skouis)/A.8691 (Rozic), a modification of the new law related to electronic notarization passed the Senate this week. This Chapter Amendment allows the Department of State (DOS) until January 31, 2023 to create a necessary registration system and, until then, an RIN system will be in place, which will allow notaries to undertake the same remote procedures that they took during the COVID-19 pandemic pursuant to Executive Order. The bill will be taken up in committee in the Assembly next week.

     

• Among the bills introduced this week:

   

  • A.8857 (Peoples-Stokes) is one of multiple bills that would establish a State of New York Public Bank. The bill was previously introduced in the Senate. NYBA is strongly opposed to these measures, citing existing programs which are successfully meeting the objectives of any type of public bank. The bill has not yet moved in either house.
    
    
  • A.8914 (Weprin)/ S.5815 (Comrie) would require banks to notify customers with accounts featuring overdraft protection when such protection is exercised. The bill has not yet moved in either house.  

State Regulatory Developments

• Department of Financial Services (DFS) Acting Superintendent Adrienne Harris has been scheduled for a confirmation hearing with State Senate legislative committees beginning Monday, January 24th.
  
  

• This week, the Department of Financial Services (DFS) published a Notice of Emergency Rule Making for amendments to specify the benchmark indices permissible for use in setting interest rates on certain variable rate loans. The Emergency Rule: (1) amends 3 NYCRR § 333.1 to expressly approve use of the indices for one-month, three-month and six-month SOFR by institutions making variable-rate, closed end personal loans; and (2) amends § 334.1 to expressly approve use of the indices for one-month, three-month and six-month SOFR in connection with variable rate junior mortgage loans, variable rate retail installment credit agreements, and variable rate closed-end retail installment contracts and obligations.  The Emergency Rule is effective immediately and is scheduled to expire on March 28, 2022, however DFS intends to propose permanent regulations. 
  
  
• As previously reported, DFS issued a request for information from State-chartered banks regarding its 1996 Guidance “Vacation Policy as an Internal Control Safeguard.” Today, DFS extended the deadline for comments to March 7, 2022.
  
  

• On January 15, the New York State Department of Health announced it has extended the requirement for employers to activate their health and safety plans under the NY Hero Act until February 15, citing ongoing issues caused by the omicron variant of COVID-19.

Federal Regulatory Developments

• The FDIC has published a final rule to amend the deposit insurance regulations for trust accounts and mortgage servicing accounts.  The changes are intended to make the deposit insurance rules easier to understand for depositors and bankers, facilitate more timely insurance determinations for trust accounts in the event of a bank failure, and enhance consistency of insurance coverage for mortgage servicing account deposits. It takes effect on April 1, 2024.
  
  
• The Federal Reserve released a long awaited discussion paper that examines the pros and cons of a potential U.S. central bank digital currency, or CBDC. It invites comment from the public and is the first step in a discussion of whether and how a CBDC could improve the safe and effective domestic payments system. The paper does not favor any policy outcome.
• President Biden has nominated former Fed Governor Sarah Bloom Raskin for the post of Vice Chair of Supervision on the Federal Reserve Board of Governors. With two additional Board vacancies, the President has also nominated Obama Administration economic advisor Lisa Cook to the Board. He also nominated Philip Jefferson to the Board. Mr. Jefferson has previously served as an economist at the central bank. The Board has not had every one of its seats filled since 2013.

Resources

• The Government Accountability Office issued a report on current techniques in trafficking and money laundering that criminal groups are using, as well as the methods federal law enforcement are using to combat the illegal activity.
  
  
• The CFPB is holding a series of webinars in March that will introduce new financial empowerment and consumer protection resources available for frontline staff working with underserved populations. Request scheduling and registration information here.
  
  
• The CFPB issued a comprehensive report on Diversity and Inclusion in the financial services industry which concludes that “executing an organizational commitment to diversity and inclusion is crucial for institutions to remain competitive.”  The report notes that the banking sector makes a very strong showing on its diversity and inclusion work.

Questions? 

Contact us at govrelations@nyba.com

Questions?