TED Article VII

Part Y

The DFS Superintendent is empowered to:

a) Bring an action against an unlicensed entity or individual as if the entity or individual were licensed and as such subject to the same penalties; and

b) Retain control over initiation and prosecution of civil actions against a regulated entity rather than the Attorney General.

Part Z

This bill provides DFS with the authority to license and regulate the student loan industry.  Banks are exempted from the licensing requirements for student loan servicers provided that the Superintendent is notified by the bank that it is acting as a loan servicer and complies with provisions relating to prohibited practices and responsibilities and any regulations promulgated by the Superintendent.

Part AA

This bill is directed at protecting vulnerable adults from financial exploitation.  A vulnerable adult is defined as an individual who because of physical or mental impairment is unable to manage their own resources or protect themselves from financial exploitation.  A banking institution is authorized to place a transaction hold on the account of a vulnerable adult under circumstances where there is a reasonable basis to suspect financial exploitation.  The bank must notify adult protective services and law enforcement of the transaction hold and inform them of the basis for such action.  Provision is made for an account holder to have access to funds for ongoing housing, living and emergency expenses during the transaction hold.  The bank and its employees are provided immunity from criminal, civil and administrative sanctions for good faith actions.

Part BB

The Superintendent of DFS based on a disqualifying event may serve charges against a person operating under a DFS license or serving as an employee, owner, director, trustee, officer, member or partner of a DFS licensee based upon a disqualifying event.  A disqualifying event is defined and includes certain criminal acts, engaging in any unsafe or unsound practice and other such acts are delineated.  The disqualification may be for a lifetime or a shorter period as determined by the Superintendent.

Part CC

This bill would create an exemption under the Banking Law for an entity to engage in limited lending activities without being subject to licensing requirements.  Such entities can only engage in making zero-interest loans and must be exempt from federal income taxes as 501c(3).  An application to operate as an exempt entity must be filed with the Superintendent. Such registration may be suspended or revoked by the Superintendent.

Part EE

This bill expands the prohibition of doing the business of making loans without a license to on-line lenders who either make loans or otherwise arrange or facilitate the funding of loans.  This applies to non-business loans of less than $25,000 and business loans of less than $50,000.

Part FF

This bill makes reverse mortgages subject to prior notice requirements and settlement conferences which are currently applicable to other mortgage products subject to the mortgage foreclosure process.

Part GG

This bill would allow the expenses of every examination of the affairs of a regulated entity by DFS to be paid for by such entity so examined.  It also provides that regulated entities would be assessed for operating expenses solely attributable to the regulated entity in proportions determined by the Superintendent to be just and reasonable.

Revenue Article VII

Part U

This bill provides that the financial institution data match system would be available when past due for liabilities become fixed and final.  It currently requires a docketed judgment with a tax warrant filed with the county clerk.  It also permits the disclosure of debt and debtor information to the financial institutions and the third party operator of the data match system.

PPGG Article VII

Part C

This bill would amend the Penal Law to provide increased penalty level based on the amount of aggregate financial damage done by computer tampering.  It also provides increased penalties for mass identity theft.

The discussion of the proposals essentially arrived at the position that of these proiposals, those that drew the most bad actor" provision (Part BB), based on addressing "Wells Fargo type" behavior. The language is very broad, and there is a likelihood that a number of segments in the financial services industry will be looking closely at this to perhaps oppose on that basis. Also, Part GG could result in higher assessments charged to examined institutions by DFS. There was some opinion that this could impact decision-making of current state-chartered institutions which may be considering switching to a federal charter. The other areas that could spark heightened interest involve Part U (data match), and banks were encouraged to review their situations in this area, and Part Y, which empowers the DFS Superintendent in legal actions vis-a-vis the State Attorney general.