A10133 would add a new section to the Banking Law governing “true lender” determinations and setting substantive rules for personal loans and short-term loans made to New York residents or people physically located in the state. The bill defines “personal loan” broadly, covers loans made through paper, electronic, internet, or telephone channels, and treats as a lender not only the entity that directly originates a loan but also entities that buy, broker, facilitate, or effectively control the loan program. It also includes anti-evasion language intended to prevent lenders from using agents, affiliates, or contractual structures to avoid New York lending rules.
For covered lenders, the bill generally subjects personal loans to New York’s existing usury and consumer-credit laws, while creating a specific safe harbor for certain short-term loans. Those short-term loans must be unsecured, for $3,000 or less, have terms between three and twelve months, amortize principal in equal installments, and avoid negative amortization. The bill caps the total cost of credit at 25% per year, limits one-time administrative charges and late fees to small flat amounts, prohibits prepayment penalties and certain default charges, and bars lenders from accelerating the debt or using loan structures designed to generate recurring late fees. It also authorizes the Superintendent of Financial Services to issue implementing regulations and adjust dollar thresholds for inflation.
The bill would materially affect state lending law by expanding regulatory oversight over nonbank and fintech-style lending arrangements, clarifying who counts as the true lender, and limiting the fees and interest that can be charged on small installment loans. It also provides enforcement tools, including civil penalties, restitution, injunctive relief, and other corrective action, and states that loans violating the section cannot generate fees or interest beyond principal. Existing loans made before the effective date and loans for commercial or business purposes are excluded, and the bill preserves federal preemption where applicable.
The general sentiment reflected in the committee action appears favorable but not unanimous. The Assembly Banks Committee voted 16-12 to refer the bill to the Committee on Codes, indicating meaningful support alongside substantial opposition. No transcript excerpts are available, so the record does not show detailed floor or committee arguments, but the vote split suggests the measure is viewed as a significant consumer-protection and anti-usury proposal with some concern about its impact on credit availability or lending operations.
The main points of contention likely center on the bill’s broad “true lender” test, its treatment of affiliates and loan purchasers as lenders, and the strict caps on costs, late fees, and default-related charges. Supporters are likely to emphasize borrower protection, curbing predatory lending, and closing loopholes used by online or partner-bank lending models. Opponents are likely to argue that the bill could restrict access to small-dollar credit, create compliance uncertainty, and interfere with legitimate lending partnerships or innovative financial products.
The bill would amend the Banking Law by creating a new section that defines personal loans, identifies who is treated as a lender for regulatory purposes, and imposes New York lending restrictions on covered loans made to residents or persons physically located in the state. It would also authorize the Superintendent of Financial Services to promulgate rules, enforce the new requirements, and adjust certain dollar thresholds over time. The measure would interact with the General Obligations Law, Penal Law, Financial Services Law, and existing usury provisions, while excluding certain regulated institutions, mortgage-related credit, business-purpose loans, and other specified exempt transactions.
The available voting history suggests the bill has support within the Assembly Banks Committee but also notable resistance, as shown by the 16-12 favorable referral vote. Because no committee transcript is provided, there is no direct record of member statements, but the split vote indicates the proposal is politically significant and somewhat divisive. Overall, the bill appears to be framed as a consumer-protection measure aimed at curbing high-cost lending, with opposition likely focused on credit access and regulatory burden.
The most likely areas of contention are the bill’s expansive definition of “lender,” which can capture entities that broker, facilitate, purchase, or economically control loans, and its anti-evasion standard that looks to the totality of circumstances. Another major issue is the 25% annualized cap on total cost of credit for short-term loans, along with tight limits on administrative and late fees, which supporters may view as necessary to prevent predatory practices but critics may see as too restrictive for small-dollar lending. The bill’s application to loans made to people physically located in New York, its treatment of fintech and bank-partnership structures, and its enforcement authority for the Superintendent are also likely to be debated.