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S06593 Summary:

S06593 Actions:

S06593 Committee Votes:

S06593 Floor Votes:

S06593 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         6593--A
 
                               2017-2018 Regular Sessions
 
                    IN SENATE
 
                                      June 6, 2017
                                       ___________
 
        Introduced  by Sen. HAMILTON -- read twice and ordered printed, and when
          printed to be  committed  to  the  Committee  on  Rules  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
 
        AN  ACT  to establish the task force on online lending institutions, and
          providing for its powers and duties; and providing for the  repeal  of
          such provisions upon expiration thereof
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Legislative findings and intent. The legislature finds  and
     2  declares  that  nationwide  financial  and technological firms have used
     3  electronic platforms to develop a completely  new  sector  of  business,
     4  known  as online lending. The New York state economy, which is driven by
     5  a virtual presence on the internet,  just  like  other  businesses,  has
     6  needs  for  capital  to  grow and prosper. The legislature further finds
     7  that in recent years, financial services have begun  to  use  electronic
     8  platforms  to  reduce costs and expand availability and have specialized
     9  in providing small personal and commercial loans to residents and  busi-
    10  nesses in this state.
    11    The  legislature  further finds that although online loans can provide
    12  another avenue for individuals and entrepreneurs to acquire capital  and
    13  grow  their  small  business, there is potential for unscrupulous online
    14  lenders to exploit consumers  through  predatory  practices.  While  the
    15  state  has  an  interest in fostering its economy and its businesses, it
    16  likewise has an interest in protecting its consumers and the  well-being
    17  of its residents.
    18    §  2.  Task  force  on online lending institutions. 1. There is hereby
    19  established a task force on  online  lending  institutions  (hereinafter
    20  referred  to in this section as the "task force") which shall consist of
    21  seven members as follows:
    22    (a) three members appointed by the governor;

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD13051-02-7
        S. 6593--A                          2
 
     1    (b) two members appointed by the temporary president  of  the  senate;
     2  and
     3    (c) two members appointed by the speaker of the assembly.
     4    2.  The appointed members should include individuals representative of
     5  the online lending community, the small business community,  the  finan-
     6  cial  services industry, and the consumer protection community. Appoint-
     7  ments shall take into consideration the expertise of the other  appoint-
     8  ees, so that the task force reflects a diversity of experience.
     9    3.  The  members  of  the task force shall receive no compensation for
    10  their services, but shall be allowed their actual and necessary expenses
    11  incurred in the performance of their duties pursuant to this section.
    12    4. Any vacancies in the membership of the task force shall  be  filled
    13  in the manner provided for in the initial appointment.
    14    5.  The task force may consult with any organization, other government
    15  entity or agency, or person, in the development of its  report  required
    16  by subdivision six of this section.
    17    6.  On  or  before  April 15, 2018, the task force shall submit to the
    18  governor, the temporary president of the senate and the speaker  of  the
    19  assembly a report containing the following:
    20    (a)  an  analysis  of  data  received  by  the department of financial
    21  services on the prevalence of these institutions in the  state,  specif-
    22  ically, how many online lenders are lending to consumers and small busi-
    23  nesses in this state;
    24    (b)  an analysis of data received by the attorney general and division
    25  of consumer affairs regarding the  number  of  complaints,  actions  and
    26  investigations related to online lending institutions;
    27    (c)  an examination of the online lending industry and the key partic-
    28  ipants therein, and an investigation and understanding  of  the  differ-
    29  ences  in  small  business  and consumer borrowers, lenders and markets,
    30  such as the history, business models and  practices  of  online  lending
    31  institutions  including  identification  of  interest  rates  charged by
    32  online lenders;
    33    (d) an examination of how  consumers  are  utilizing  online  consumer
    34  credit  to  manage  existing debt, potentially reduce borrowing costs or
    35  access needed funds;
    36    (e) an examination of the existing small business credit gap and small
    37  business' use of credit and credit needs;
    38    (f) identification of alternatives for consumers and small  businesses
    39  who are unable to access traditional financing and whether new technolo-
    40  gies can enhance access to credit;
    41    (g)  an examination of whether existing federal and state laws already
    42  provide appropriate police powers and regulation of small  business  and
    43  consumer lending by online lending institutions;
    44    (h) an evaluation of the impact of any contemplated or proposed law or
    45  regulation  on  the  small business credit gap, including a quantitative
    46  analysis of the amount of increased or  decreased  credit  available  to
    47  small  businesses  as  a result of such law or regulation, including the
    48  extent to which access to credit would be  affected  under  the  state's
    49  current usury laws;
    50    (i)  an  analysis of the potential interaction of federal law with any
    51  contemplated or proposed state regulation;
    52    (j) an exploration of options for multistate collaboration to  harmon-
    53  ize the laws and regulations of various states related to small business
    54  and consumer lending across state borders;
        S. 6593--A                          3
 
     1    (k)  an  assessment  of best practices for small business and consumer
     2  loan disclosures, including current online lending industry  efforts  to
     3  advanced standardized and clear information for borrowers;
     4    (l)  an  assessment of whether consumer loans and small business loans
     5  are treated differently by online lending institutions and if any  level
     6  of oversight should take such differences into consideration;
     7    (m)  an  identification  of what consumer protections exist to protect
     8  consumers in this state  from  predatory  practices  of  online  lending
     9  institutions; and
    10    (n) a determination of what new measures, if any, are needed to ensure
    11  consumers  are  protected  from  deceptive  or predatory lending without
    12  unduly restricting access to credit.
    13    All information and data required to  be  reported  pursuant  to  this
    14  subdivision  shall be provided in the aggregate statewide, and shall not
    15  provide any information or data  relating  to  a  specific  borrower  or
    16  borrowers, or lender or lenders.
    17    §  3.  This act shall take effect immediately, and shall expire and be
    18  deemed repealed April 15, 2018.