CHAPTER LAW SUMMARY 2007 PART I – BILLS SIGNED INTO LAW Chapter Law 6 – Workers Compensation Reform S. 3322 (Bruno)/A. 6163 (Silver), representing a three-way agreement among leaders of both Houses of the legislature and the governor, reformed the State’s Workers’ Compensation Law. The bill provided enhanced payments to workers for certain claims, expedited medical services for claimants, increased penalties and enforcement against fraud, new cost-savings measures and premium discounts for employers. It was signed as Chapter 6 of the Laws of 2007 on March 13. Portions became effective immediately while other provisions were delayed as much as 180 days. Chapter Law 14 – Public Officers Integrity Act Another early three-way agreement was represented by S. 2876 (Bruno)/A. 3736-A (Silver), the Public Employee Ethics Reform Act of 2007, which established comprehensive reforms of New York's ethics and lobbying laws. Among other provisions, the bill merges the State Lobbying Commission and State Ethics Commission into a new State commission on Public Integrity. After being signed on March 26 as Chapter 14 of the Laws of 2007, different provisions became effective at different dates ranging from April 25, 2007 through December 31, 2008. Chapter Law 41 – Student Loan Reform S. 5734 (LaValle)/A. 7950 (Glick), in response to an investigation initiated by the Attorney General’s Office, established new restrictions on relations between student lenders and college officials. The bill, called the Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007, contains: prohibitions on payments by lenders to colleges based on the number and amount of student loans steered to the lenders; restrictions on both the offering and receipt of certain trips and other gifts by lenders to college officials; limitations on certain practices by student loan call centers; guidelines affecting advisory board compensation and preferred lender lists; and additional disclosure requirements. The bill was quickly passed by both Houses and signed by Governor Spitzer, even though it became clear that the bill had a number of technical flaws. NYBA has met with the State Education Department to correct the technical problems during the process of rulemaking called for in the legislation. The Association will continue to work through the regulatory process to ensure that the rules do not preclude legitimate student lending practices. It was signed on May 29 as Chapter 41 of the Laws of 2007 and becomes effective 180 days after enactment, November 25. Chapter Law 60 – Budget and Taxes On January 31, Governor Spitzer released his first Executive Budget, proposing a number of extremely objectionable provisions affecting the Bank Tax, including the elimination of the deduction for dividends received from a closely held real estate investment trusts (REIT). The Budget also conformed the bad debt deduction for both commercial banks and thrifts to the federal bad debt deduction and required recapture, over a four-year period, of deductions in excess of actual bad debt losses taken over the prior five tax years. In addition, the Budget required the add back of expenses related to interest income from tax-exempt U.S., New York State and New York municipal obligations and interest income, dividend income and net gains from subsidiary capital. Other provisions affecting banks: - restricted the tax benefits of certain grandfathered 9-A corporations, certain corporations taxable under article 9-A pursuant to the Gramm-Leach-Bliley transitional rules and certain other investment subsidiaries; - eliminated the 20 percent reduction in the wage factor in apportioning New York State income; - mandated combined reporting upon the existence of certain substantial intercorporate transactions; - made permanent the authority for the Tax Commissioner to require reporting and disclosure of transactions that may be described as tax avoidance practices; and - extended the Bank Tax and the Gramm-Leach-Bliley transitional provisions for two years. The State Budget for 2007-2008 was finally completed on Sunday morning, April 1. Although NYBA did not achieve all of its goals, the final budget reflected the extensive campaign the Association had waged. The final package did not touch the cost of carry, bad debt deduction and wage factor, while protecting the ability of banks to own 9A general corporations (except in a narrowed set of circumstances). It also reduced the bank tax rate from 7.5% to 7.1% immediately. The legislature also decided not to provide the authority for New York City to increase its bank taxes. In the area of the REITs, for the largest banks, there will be a four-year phase out of the captive REIT deduction in lieu of the Executive Budget’s immediate elimination. 70% of the dividend income from a REIT will be taxed in 2007 and 2008 and 85% in 2009 and 2010. Beginning in 2011, the REIT deduction will be eliminated. The final legislation provided that banks with assets of $8 billion or less can maintain their REIT deduction. The budget also extended the bank tax and the Gramm-Leach-Bliley transitional rules for two years, until December 31, 2009. The bank tax provisions in the budget were effective as of January 1, 2007. The Governor signed the budget bill (S. 2110-C, Budget/A. 4310-C, Budget) on April 9 as Chapter 60 of the Laws of 2007. Chapter Law 69 – Telemarketing Amendment S. 3543 (Fuschillo)/A. 7648 (Pheffer) makes New York State’s “do not call” law consistent with the regulations of the Federal Trade Commission by reducing from 90 to 31 days the period after which a telemarketer may not call a number on the list. The bill was signed as Chapter Law 69 on June 4 and became effective immediately. Chapter Law 71 – Standby Guardian Hearings An Office of Court Administration bill, S. 4036 (DeFrancisco)/A. 7372 (Weinstein) would allow a Surrogate Court judge to waive a hearing and appoint a guardian ad litem to determine whether a standby guardian is needed. Governor Spitzer signed the bill as Chapter 71 of the Laws of 2007 on June 4, effective immediately. Chapter Law 72 – Internet and E-Mail Consumer Protection S. 4964 (Fuschillo)/A. 7649 (McEneny) makes consistent the requirements of New York’s General Business Law with those of the Federal Trade Commission affecting e-mail and Internet purchases. The bill restricts charges on credit or debit cards for delayed merchandise, requiring credits against such charges in certain cases. It was signed as Chapter Law 72 on June 4, effective the same day. Chapter Law 83 – New York City Finance Law Extension S. 5867 (Padavan)/A. 8277 (Farrell) extends for a year, until June 30, 2008, certain provisions of the Local Finance Law facilitating the sale of bonds and notes by New York City. On June 29, it was signed as Chapter Law 83 with an immediate effective date. Chapter Law 89 – Power for Jobs Extension S. 5826-A (Wright)/A. 9254 (Tonko) extends for a year, until June 30, 2008, the Power for Jobs and Energy Cost Savings Benefits program. Retroactively effective to the same date as the original law, it was signed on June 29 as Chapter Law 89. Chapter Law 91 – Power for Jobs Funding S. 6179 (Wright)/A. 9255 (Tonko) provides for the voluntary contribution of the Power Authority of the State of New York to the Power for Jobs program of $30 million in fiscal year 2007-2008. It was signed as Chapter 91 of the Laws of 2007 on June 29, effective immediately. Chapter Law 93 – REIT Taxation Technical Corrections With the enactment of the State budget on April 1, NYBA believed that all tax issues for the year except one had been resolved. Several banks were inadvertently left with the potential for taxation of 140% of the dividends from their REITs. The State recognized this flaw during budget negotiations and committed to technical corrections after passage of the budget. Instead, the Budget Division and Tax Department subsequently attempted to use correction of this “overlap” problem to reopen provisions of the enacted budget that would have reached outof-State REIT holding companies and revised the treatment of REITs owned by banks under $8 billion, while modifying the effectiveness of the thrift formula bad debt reserve. In addition, a timing problem would have imposed significant additional taxes on one bank. During the last six weeks of the legislative session, NYBA spent extensive time and resources addressing these two issues. As a result, the Association was successful in guiding a bill to enactment that corrected the overlap problem and the bank timing problem while preserving the other provisions agreed to in the budget. NYBA filed a memorandum urging that the bill be signed prior to June 30, because failure to do so would have required public reporting of the adverse tax consequences of the April budget. Governor Spitzer signed the bill, S. 6335 (Farley)/A. 9311 (Silver), on June 29 as Chapter 93 of the Laws of 2007. It was effective immediately. Chapter Law 94 – REIT Taxation for 9-A Corporations S. 6336 (Rules)/A. 9313 (Silver) corrected the REIT overlap problem for Article 9-A (General Corporation) taxpayers. It was also signed on June 29 and became Chapter Law 94 with an effective date of January 1, 2007. Chapter Law 96 – Article 9-A Taxation Another technical correction, this one to permit certain taxpayers to elect taxation under Article 9-A or 32, S. 6354 (Rules)/A. 9253-A (Bing) was signed as Chapter 96 of the Laws of 2007 on June 29. It was also effective June 29. Chapter Law 114 – Foreign ATM Access Fees S. 2747 (Farley)/A. 6490 (Towns) authorizes New York banks to charge ATM fees on customers with foreign bank accounts. NYBA strongly supported the bill, which was signed as Chapter Law 114 on July 3 and becomes effective October 1. Chapter Law 154 – Banking Technical Corrections S. 4958 (Farley)/A. 8365 (Jeffries) makes various technical corrections to the Banking Law. Governor Spitzer signed it as Chapter 154 of the Laws of 2007 on July 3 with an immediate effective date. Chapter Law 186 – Community Development Financial Institutions S. 3575-A (Farley)/A. 6681-A (Towns) provides doe the creation of a community development financial institutions program modeled on the federal program. It was signed as Chapter 186 of the Laws of 2007on July 3, and was effective July 3. Chapter Law 205 – Judicial Subpoena Penalty S. 4212 (Volker)/A. 8190 (Lentol) increases the maximum penalty for disobeying a judicial subpoena from $50 to $150. Governor Spitzer signed it as Chapter Law 205 on July 3 with an effective date of January 1, 2008. Chapter Law 208 – Unlawful Acts or Practices Penalty S. 4306 (Fuschillo)/A. 3253 (Peoples) increases the civil penalty for unlawful acts or practices related to consumer protection. It was signed July 3 as Chapter 208 of the Laws of 2007, effective immediately. Chapter Law 212 – Open End Loan Fee Extension S. 4782-A (Farley)/A. 8571 (Lancman) extends until 2009 the provisions of the Banking Law with regard to certain fees on open end loans. The Governor signed the bill as Chapter 212 of the Laws of 2007 on July 3, effective on signature. Chapter Law 229 – SONY MA Extension S. 3965-A (Bonacic)/A. 8799 (V. Lopez) extends the effectiveness of the State of New York Mortgage Agency (SONY MA) and increases its authority. Signed on July 9 as Chapter 229 of the Laws of 2007, it became effective on July 9. Chapter Law 233 – Cardholder Personal Identification S. 2560 (Kruger)/A. 335 (Greene), eliminates the exemption for purchases not requiring prior approval from the prohibition on including personal identifying information of a debit or credit card holder on a card form or any attachment. It was signed on July 18 as Chapter Law 233 with an immediate effective date. Chapter Law 248 – Real Estate Appraiser Licensing S. 4415 (O. Johnson)/A. 7380 (Jeffries) conforms the State standards for the licensing and certification of real estate appraisers to the new federal standards. It became Chapter 248 of the Laws of 2007 on the Governor’s signature on July 18 and will be effective January 1, 2008. Chapter Law 255 – Lower Manhattan Energy Program Extension S. 5866 (Padavan)/A. 8132 (Silver) extends provisions of law with regard to special rebates and discounts for the Lower Manhattan Energy Program. It was signed July 18 as Chapter 255 of the Laws of 2007 and became effective July 18. Chapter Law 258 – Environmental Protection Fund Deposits S. 5304 (Marcellino)/A. 8339 (Sweeney) provides for additional deposits to be made to the State Environmental Protection Fund. It was signed as Chapter Law 258 on July 18, effective April 1, 2007. Chapter Law 262 – Water Pollution Control Linked Deposit Program S. 6098 (Saland)/A. 8460 (Magee) establishes a new linked deposit program in the Environmental Facilities Corporation to provide support for loans made to farmers, small businesses and home owners to support the construction of water pollution control facilities. The Governor signed the bill as Chapter Law 262 on July 18 to be effective in 180 days on January 14, 2008. Chapter Law 274 – Community Bank Deposit Program S. 2863-A (Farley)/A. 9159 (Towns) converts the State’s state charter deposit program into the community bank deposit program. It was signed as Chapter Law 274 on July 18, effective on signature. Chapter Law 279 – Pre-Need Funeral Account Escheat S. 961-A (Alesi)/A. 2023-A (Gianaris) revises the statute dealing with the escheat of funds deemed abandoned in a pre-need funeral account. On July 18, Governor Spitzer signed the bill as Chapter Law 279, effective January 1, 2008. Chapter Law 322 – Streamlined Wild Card A NYBA initiative, S. 4392-B (Farley)/A. 7652-B (Towns)/A. 9260 (Towns) will provide the State the opportunity to respond quickly and effectively to alterations in the rights, powers, privileges and authority of national banks and federally chartered thrift institutions. The enacted bill requires the Banking Superintendent to act within 45 days of receiving any wild card application, by forwarding the application to the Banking Board for its approval, denying the application, or requesting up to 120 days additional time to study the application. After the Governor signed the bill on July 18 as Chapter 322 of the Laws of 2007, it becomes effective on September 1. Chapter Law 346 – Police Reports of Identity Theft S. 5541-A (Fuschillo)/A. 8835-A (Pheffer) requires law enforcement agencies to take police reports of identity theft from victims. Signed as Chapter 346 of the Laws of 2007 on July 18, it became effective on that date. Chapter Law 402 – Local Government Procurement Policies S. 5083 (Little)/A. 7399 (Hoyt) requires that local government procurement policies identify the officials responsible for purchasing. It was signed as Chapter 402 of the Laws of 2007 on August 1, effective January 1, 2009. Chapter Law 419 – Small Business Guides to Regulation S. 258-A (Maziarz)/A. 718-A (Christensen) requires agencies publishing regulations with an effect on small businesses to publish guides to small business compliance with the regulations. On August 1, it was signed as Chapter 419 of the Laws of 2007, effective October 30, 2007. Chapter Law 423 – Testamentary Effect of After-Born Children S. 789 (DeFrancisco)/A. 8963 (Weinstein) clarifies the treatment in wills of after-born children. It was signed on August 1 as Chapter Law 423, effective August 1. Chapter Law 435 – Outsourcing Study S. 2377 (Leibell)/A. 8284 (Bradley) requires the commissioner of labor to report, by February 1, 2008, on issues relating to offshore outsourcing of information technology jobs and the future of the State’s job market. The Governor signed the bill on August 1 as Chapter 435 of the Laws of 2007. It was effective immediately. Chapter Law 458 – Foreclosure Notice S. 4210 (DeFrancisco)/A. 8630 (Titus) requires an additional notice clearly stating the consequences to a homeowner of failing to respond to a notice of foreclosure. The bill was signed as Chapter Law 458 on August 1, effective August 1. Chapter Law 470 – Document Discovery S. 4988 (DeFrancisco)/A. 9011 (Zebrowski) provides for document discovery by the party conducting an examination of a fiduciary under oath. The Governor signed the bill on August 1 as Chapter 470 of the Laws of 2007, effective January 1, 2008. Chapter Law 488 – Informed Consent for Attorney-Executors S. 5967 (DeFrancisco)/A. 8748 (Weinstein) requires an attorney who prepares a will to obtain a written acknowledgement of disclosure from the testator to also serve as executor. On August 1, it was signed as Chapter Law 488, effective August 31. Chapter Law 501 – Procurement Contact Effective Date S. 6171 (Lanza)/A. 8797-A (Destito) amends the effective date of the procurement lobbying act, Chapter 1 of the Laws of 2005, to clarify restricted contacts under the act. It was signed as Chapter 501 of the Laws of 2007 on August 1, effective immediately. Chapter Law 509 – Internet Warning S. 249-A (Morahan)/A. 8231-A (Brodsky) requires any retail business that offers Internet access to provide certain warnings to the public. It becomes effective on December 13 after being signed as Chapter Law 509 on August 15. Chapter Law 527 – Fire Company Mortgage Recording Tax S. 2989 (Rath)/A. 7049 (DelMonte) prohibits the imposition of a mortgage recording tax on any mortgage executed by a fire company or volunteer ambulance service. It was signed on August 15 as Chapter 527 of the Laws of 2007, effective immediately. Chapter Law 533 – Derivatives Employee Fingerprinting S. 4056 (Skelos)/A. 8361 (Silver) requires employees of a designated contract market or derivatives clearing organization involved in the commodities market to be fingerprinted. Governor Spitzer signed the bill as Chapter 533 of the Laws of 2007 on August 15, also effective August 15. Chapter Law 549 – Real Estate Agent Disclosure S. 5089-A (DeFrancisco)/A. 8326-A (Morelle) provides increased disclosure of real estate agency relationships. It was signed on August 15 as Chapter Law 549 with an effective date of January 1, 2008. Chapter Law 552 – High Cost Home Loan Ceiling S. 5618-A (Farley)/A. 8794-A (Towns) increases the principal amount of a home loan for purposes of the high-cost home loan bill to the Fannie Mae conforming loan limit, which is now $417,000. Currently, the threshold is the lower of $300,000 or the conforming loan limit. The bill was signed on August 15 as Chapter 552 of the Laws of 2007 and becomes effective on October 14, 2007. Chapter Law 553 – Mortgage Loan Originators S. 5620-B (Farley)/A. 8793-A (Benjamin) clarifies the regulation of mortgage loan originators. It is an amendment to Chapter Law 744 of 2006 and makes the 2006 Chapter consistent with other provisions of the Banking Law affecting mortgage brokers and bankers. NYBA worked with the Department on both the 2006 law and this amendment to ensure that banks and their affiliates would be exempt so long as they maintained the same type of educational requirements for their loan originators as mortgage bankers and brokers. The bill was signed as Chapter 553 of the Laws of 2007 on August 15 and becomes effective January 1, 2008, the same date as Chapter 744 of 2006. Chapter Law 636 – After-Discovered Estate Assets S. 2383 (Leibell)/A. 8283 (Bradley) waives the requirement for notice for assets discovered after the original probate and distribution of the assets of an estate, if the value of the asset is under $5,000 and no more than seven years have passed since the original distribution occurred. Governor Spitzer signed the bill on August 28 as Chapter Law 636 and it becomes effective January 1, 2008. PART II – BILLS VETOED Veto Message 4 – Check Cashing Restrictions S. 827 (Farley)/A. 4204 (Towns) would have extended the geographic restrictions on the location of bank branches engaged in the check cashing business. NYBA requested a veto pointing out the bill’s anti-competitive character. It was vetoed on May 21, accompanied by Veto Message 4. Veto Message 23 – Power of Attorney Remedy S. 2062 (DeFrancisco)/A. 2692 (Magnarelli) would have provided for a new special proceeding to compel a financial institution to honor a properly executed short-form power of attorney. NYBA urged that the Governor veto the bill as limiting the ability of financial institutions to ascertain whether a power was appropriately granted. The bill was vetoed on July 3, accompanied by Veto Message 23. Veto Message 35 – Employee Social Security Number Protection S. 4565 (Leibell)/A. 3076 (Bradley) would have prohibited employers from using employee social security numbers for identification purposes. NYBA strongly supported a veto of the bill, pointing out that it would have precluded many legitimate uses of social security numbers such as in employee benefit plans and on employment applications. Governor Spitzer vetoed the bill on July 3, issuing Veto Message 35. Veto Message 60 – Dealer Transfer Fee S. 3853 (Fuschillo)/A. 201 (Gantt) would have exempted charities from the $5 vehicle transfer fee for vehicles donated to the charities. It was veto on July 18, accompanied by Veto Message 60. Veto Message 66 – Charitable Trust Commission Allocation S. 5127 (DeFrancisco)/A. 8992 (Weinstein), a long-sought NYBA goal, would have changed the allocation of commissions on charitable trusts to the 1/3rd against income, 2/3rds against principal which applies to non-charitable trusts. It was amended to increase certain commissions for individual trustees. NYBA urged the bill be approved, but the Governor vetoed the bill on July 18 on the grounds of the increased individual trustee commissions. The Veto Message was number 66. Veto Message 75 – Adverse Action Because of Identity Theft S. 4723-A (Fuschillo)/A. 61-A (Lafayette) would have prohibited any person from taking any adverse action because a consumer had been the victim of identity theft. NYBA urged a veto of the bill because it would have prohibited creditors from taking actions which protect consumers, such as through the cancellation of credit cards. On August 1, the Governor vetoed the bill, issuing Veto Message 75. Veto Message 76 – Identity Theft Prevention S. 5046-A (Fuschillo)/A. 217-B (Pheffer) would have established the Identity Theft Prevention and Mitigation Unit in the Consumer Protection Board. The Governor vetoed the bill as unnecessary, issuing Veto Message 76 on August 1. Veto Message 85 – Lienholder Notice of Motor Vehicle Sale S. 4260-A (Lanza)/A. 8329-A (Ortiz) would have eased requirements for the sale of motor vehicles worth less than $500. It was vetoed on August 1. Veto Message 85 stated that the bill provided insufficient notice to lienholders of a pending sale. Veto Message 101 – Timing Technical Tax Correction S. 6340 (Rules)/A. 9312 (Silver) contained language making a technical correction in the budget that was identical to a provision in Chapter Law 93. The bill was vetoed as unnecessary on August 1, accompanied by Veto Message 101. Veto Message 109 – Universal Default S. 2969-B (Fuschillo)/A. 5325-C (Rivera) would have prohibited the practice of “universal default,” but would also have prohibited the use of a credit card holder’s credit score, after a card is issued, for any purpose other than increasing the cardholder’s line of credit. NYBA strongly urged a veto, pointing out that the bill would deny creditors the opportunity to protect themselves from individual cardholders whose credit records seriously deteriorate after a card is issued and is inconsistent with the practice of risk-based pricing in general. Governor Spitzer vetoed the bill on August 15, noting in veto message 109 that the bill would “have no practical effect, because few if any New York residents hold credit cards issued by New York banks,” and that, “to the extent that this bill might have a practical impact, it would harm, rather than benefit, New York credit card customers.” By limiting risk-based pricing, it “would force credit card issuers to increase interest rates or fees charged to all of their credit card holders -- thereby shifting the financial burden from those who are in default on an account, to those who are not.” Veto Message 124 – Credit Inquiry Effect on Credit Score A. 1416 (Bradley)/S. 4566 (Leibell) would have precluded companies from using a consumer’s inquiry or frequency of inquiries with regard to an automobile or mortgage loan in determining the consumer’s credit score. NYBA urged disapproval of this bill because it would limit credit availability to New York consumers, would require New York lenders to recalculate the underwriting of their automobile and mortgage loans, and would place New York lenders at a competitive disadvantage with regard to lenders in other states. On August 15, the Governor vetoed the bill, adopting NYBA’s arguments, and referencing the Association in Veto Message 124. In all, NYBA requested 6 vetoes from the Governor. All of those requests were honored and, in 5 of the 6 veto messages, NYBA’s opposition and arguments were cited.