S T A T E   O F   N E W   Y O R K
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                                  1484

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced by M. of A. WRIGHT, CLARK, O'DONNELL, ROBINSON -- Multi-Spon-
  sored  by  --  M. of A.   BRENNAN, DIAZ, McENENY, PERRY, TOWNS -- read
  once and referred to the Committee on Banks

AN ACT to amend the banking law and  the  general  obligations  law,  in
  relation  to prohibiting foreign banking corporations from engaging in
  high-cost payday loans

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The banking law is amended by adding a new section 202-k to
read as follows:
  S  202-K.  PROHIBITION  OF PAYDAY LOANS.  1. NO FOREIGN BANKING CORPO-
RATION SHALL MAKE ANY PAYDAY LOAN, EITHER  DIRECTLY  OR  INDIRECTLY,  OR
MAKE  ANY  LOAN  TO  ANY OTHER LENDER FOR PURPOSES OF FINANCING A PAYDAY
LOAN OR REFINANCING OR EXTENDING ANY PAYDAY LOAN.
  2. FOR PURPOSES OF THIS SECTION "PAYDAY LOAN" MEANS ANY TRANSACTION IN
WHICH A SHORT-TERM CASH ADVANCE IS MADE TO A CONSUMER  IN  EXCHANGE  FOR
(I)  A  CONSUMER'S  PERSONAL  CHECK  OR SHARE DRAFT, IN THE AMOUNT OF AN
ADVANCE PLUS A FEE, WHERE PRESENTMENT OR NEGOTIATION OF  SUCH  CHECK  OR
SHARE  DRAFT  IS DEFERRED BY AGREEMENT OF THE PARTIES UNTIL A DESIGNATED
FUTURE DATE; OR (II) A CONSUMER'S AUTHORIZATION TO DEBIT THE  CONSUMER'S
TRANSACTION ACCOUNT, IN THE AMOUNT OF THE ADVANCE PLUS A FEE, WHERE SUCH
ACCOUNT WILL BE DEBITED ON OR AFTER A DESIGNATED FUTURE DATE.
  S  2.  The  general obligations law is amended by adding a new section
5-532 to read as follows:
  S 5-532. PROHIBITION ON PAYDAY LOANS.  1. A CREDITOR MAY  NOT  MAKE  A
PAYDAY  LOAN TO ANY PERSON IF THE CREDITOR KNOWS OR HAS REASONABLE CAUSE
TO BELIEVE THAT:
  A. THE PERSONAL CHECK OR SHARE DRAFT THE CREDITOR  RECEIVES  FROM  THE
PERSON,  IN  EXCHANGE  FOR  THE  LOAN, IS DRAWN ON AN INSURED DEPOSITORY
INSTITUTION OR INSURED CREDIT UNION; OR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD00215-01-9

A. 1484                             2

  B. THE ACCOUNT THE CREDITOR RECEIVES PERMISSION  FROM  THE  PERSON  TO
DEBIT, IN EXCHANGE FOR THE LOAN, IS A TRANSACTION ACCOUNT OR SHARE DRAFT
ACCOUNT AT AN INSURED DEPOSITORY INSTITUTION OR AN INSURED CREDIT UNION.
  2. FOR PURPOSES OF THIS SECTION:
  A. "INSURED CREDIT UNION" SHALL MEAN ANY CREDIT UNION CHARTERED BY THE
FEDERAL  GOVERNMENT  OR  FEDERALLY  INSURED  CREDIT UNION CHARTERED BY A
STATE.
  B. "PAYDAY LOAN" SHALL MEAN ANY TRANSACTION IN WHICH A SHORT-TERM CASH
ADVANCE IS MADE TO A CONSUMER IN EXCHANGE FOR (I) A CONSUMER'S  PERSONAL
CHECK  OR  SHARE  DRAFT,  IN THE AMOUNT OF THE ADVANCE PLUS A FEE, WHERE
PRESENTMENT OR NEGOTIATION OF SUCH CHECK OR SHARE DRAFT IS  DEFERRED  BY
AGREEMENT  OF  THE  PARTIES  UNTIL  A  DESIGNATED FUTURE DATE; OR (II) A
CONSUMER'S AUTHORIZATION TO DEBIT THE CONSUMER'S  TRANSACTION  OR  SHARE
DRAFT  ACCOUNT,  IN  THE  AMOUNT  OF  THE ADVANCE PLUS A FEE, WHERE SUCH
ACCOUNT WILL BE DEBITED ON OR AFTER A DESIGNATED FUTURE DATE.
  S 3. This act shall take effect on the ninetieth day  after  it  shall
have become a law.