August 26, 2026
On August 26, 2026, New York Senator Zellnor Myrie (20th District) introduced Senate Bill 10688, which would opt New York out of the federal interest rate exportation provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980 ("DIDMCA") for state-chartered institutions. Litigation over recent state DIDMCA opt-outs continues in Colorado and Oregon, where banks and industry trade groups are debating the impact of DIDMCA opt-outs from state bank exportation authority, focusing intently on the question of where a loan is "made" for purposes of the interest rate exportation authority.
Section 521 of the DIDMCA allows an FDIC-insured state-chartered institution to charge the interest rate permitted by the state in which the institution is located and export that rate into other states, even if the borrower's state of residence would not permit that rate under its state law. Proponents of opt-outs argue that Section 525 of the DIDMCA permits states to opt out of Section 521. The states that have opted out recently have argued that if a state opts out of Section 521, a state-chartered institution making loans to residents of the opt-out state must comply with the usury limit of the opt-out state. The counterargument, raised by industry and the Federal Deposit Insurance Corporation, is that a loan is not necessarily "made" in a consumer's state if the bank "makes" the loan in another state (i.e., its home state where the underwriting and decisioning happen). The parties are actively litigating these questions in the courts, and New York appears to know the central issues in those cases and tried to address where a loan is "made" for purposes of New York law in this bill.
Specifically, S.B. 10688 provides that a consumer credit transaction is made in New York "when the consumer is a resident of [New York] at the time the account is opened or the transaction is consummated and one or more material acts [as defined by the statute] necessary to create, fund, use, service, repay, collect or enforce the obligation occurs in [New York]." A "consumer credit transaction" is defined as a loan, credit sale, advance, line of credit, open-end consumer credit plan, credit card account, balance transfer, cash advance, or other extension of credit to a consumer, but it does not include credit secured by a first lien on real property or a dwelling. Under S.B. 10688, a covered consumer credit transaction made in New York would be subject to the applicable New York interest limitation and to the otherwise applicable New York laws concerning the charging, taking, receiving, reserving, collection, and enforcement of interest.
The New York Department of Financial Services and the New York Office of the Attorney General would have enforcement authority and may impose a civil penalty not exceeding $2,500 for each violation or $10,000 for each knowing or willful violation.