Current through Register Vol. 46, No. 12, March 20, 2024
(a) Purpose. The purpose of this section is
to facilitate the Department's evaluations of banking institutions' records of
meeting the credit needs of their local communities, in compliance with to
Section 28-b of the New York Banking Law, including the assessment factors
delineated in Section 28-b(3)(a).
(b) Information gathering. Subject to the
requirements of this section, in the case of any application for credit by a
business to a banking institution which has originated at least 25 credit
transactions for businesses in each of the two preceding calendar years, the
banking institution shall:
(1) inquire
whether the business is a minority- or women-owned business, without regard to
whether such application is received in person, by mail, by telephone, by
electronic mail or other form of electronic transmission, or by any other
means, and whether or not such application is in response to a solicitation by
the banking institution;
(2) at the
time of application, notify such applicants in writing, or orally for
applications made by telephone or another medium that does not involve
providing any paper or electronic documents, that:
(i) any applicant for credit may refuse to
provide any information requested pursuant to this subdivision (b) in
connection with any application for credit; and
(ii) that the banking institution is
prohibited from discriminating on the basis of any information provided in
response to an inquiry made pursuant to this subdivision or on whether the
applicant provides this information; and
(3) maintain a record of the responses to
such inquiry, separate from the application and accompanying
information.
(c) A
banking institution may inform the applicant that New York State law requires
it to ask for the principal owners' ethnicity and race to help ensure that all
applicants for credit are treated fairly and that communities' credit needs are
being fulfilled.
(d) A banking
institution is neither required nor permitted to verify the minority-owned
business status or women-owned business status that the applicant provides, or
report any information on an applicant's principal owners based on visual
observation and/or surname of any individual associated with the
applicant.
(e) No access by
underwriters.
(1) Limitation. Where feasible,
no loan underwriter or other officer or employee of a banking institution, or
any affiliate of a banking institution, involved in making any determination
concerning an application for credit shall have access to any information
provided by the applicant pursuant to a request under subdivision (b) of this
section in connection with such application.
(2) Limited access. If a banking institution
determines that a loan underwriter or other officer or employee of a banking
institution, or any affiliate of a banking institution, involved in making any
determination concerning an application for credit should have access to any
information provided by the applicant pursuant to a request under subdivision
(b) of this section, the banking institution shall provide written notice to
the applicant, at the time of application or as reasonably practicable
thereafter, of the access of the underwriter to such information.
(f) Form and manner of
information.
(1) In general. As applicable,
each banking institution shall compile and maintain a record of the information
provided by any applicant pursuant to a request under subdivision (b) of this
section, or a record that an applicant declined to provide such information.
The Department will issue a sample data collection form that banking
institutions may use to collect information provided by applicants pursuant to
this section and may update such form from time to time as the Department deems
necessary.
(2) Itemization.
Information compiled and maintained under paragraph (1) shall be itemized in
order to clearly and conspicuously disclose:
(i) an alphanumeric identifier, unique within
the banking institution to the specific application, which can be used to
identify and retrieve the specific files corresponding to the
application;
(ii) the date the
application was received by the banking institution;
(iii) the means by which the applicant
submitted the application to the banking institution;
(iv) the type of loan or other credit being
applied for, including:
(A) the credit
product; and
(B) the length of the
loan term, in months, if applicable;
(v) the purpose of the loan or other credit
being applied for;
(vi) the amount
of the loan, credit, or credit limit applied for;
(vii) if the application is approved, the
amount of the credit transaction or the credit limit approved for such
applicant;
(viii) the type of
action taken with respect to such application, namely originated, approved but
not accepted, denied, withdrawn by the applicant, or incomplete;
(ix) the date the action reported pursuant to
subparagraph (viii) of this paragraph was taken;
(x) for denied applications, the principal
reason or reasons the banking institution denied the application;
(xi) the census tract in which the principal
place of business of the applicant is located;
(xii) the gross annual revenue of the
applicant's business for the last fiscal year preceding the date of the
application;
(xiii) the number of
non-owners working for the applicant;
(xiv) the time the applicant has been in
business, described in whole years, as provided by the applicant, unless the
banking institution verifies the information provided, in which case it shall
use the verified information;
(xv)
pricing information for transactions that were originated or approved but not
accepted, including:
(A) the interest rate
that is or would be applicable to the loan or other credit applied
for;
(B) the total amount of all
charges payable directly or indirectly by the applicant and imposed directly or
indirectly by the banking institution at or before origination as an incident
to or a condition of the extension of credit;
(C) the total amount of all charges included
in clause (f)(2)(xi)(B) of this section that are fees paid by the applicant
directly to a broker or to the banking institution for delivery to a
broker;
(D) the total amount of all
non-interest charges that are scheduled to be imposed over the first annual
period of the credit transaction;
(E) for a merchant cash advance or other
sales-based financing transaction, the difference between the amount advanced
and the amount to be repaid; and
(F) whether the terms of the covered credit
transaction include a charge imposed for paying all or part of the
transaction's principal before the date on which the principal is
due;
(xvi) whether the
business is a minority-owned business, a women-owned business, or both, as
defined in this part, or whether the business has invoked its right to refuse
to provide any information requested pursuant to this section;
(xvii) the race and ethnicity of the
applicant's principal owners, and
(xviii) any additional data that the
Department determines would aid in fulfilling the purposes of this
section.
(3) No
personally identifiable information. In compiling and maintaining any record of
information under this section, a banking institution may not include in such
record the name, specific address (other than the census tract required under
subparagraph (2)(v) of this subdivision), telephone number, electronic mail
address, or any other personally identifiable information concerning any
individual who is connected with the minority- or women-owned business
applicant.
(4) Previously collected
data. A banking institution is permitted, but not required, to reuse previously
collected data to satisfy paragraph (2) of this subdivision, and not required
to restate the disclosures otherwise required by paragraph (2) of subdivision
(b) of this section, if:
(i) The data were
collected within the same calendar year as the current application;
and
(ii) The banking institution
has no reason to believe the data are inaccurate.
(5) Race and ethnicity of the applicant's
principal owners.
(i) When asking for a
principal owner's ethnicity and race, a banking institution shall allow the
applicant to respond using aggregate and disaggregated ethnicity and race
categories and subcategories. The disaggregated subcategories shall include the
"other" disaggregated subcategories that provide the option to self-identify
using free-form text on a paper or electronic data collection form or using
language that informs the applicant of the opportunity to self-identify when
taking the application by means other than a paper or electronic data
collection form, such as by telephone.
(ii) When asking for a principal owner's
ethnicity and race, a banking institution may, but is not obligated to, use the
sample data collection form in Appendix A to Part 76.
(iii) A banking institution shall permit an
applicant to identify its principal owners as being of the same particular
disaggregated race and/or ethnicity subcategories specified in 12 CFR Part 1003
("Regulation C") and its appendices.
(iv) A banking institution shall offer the
applicant the option of selecting more than one ethnicity and race for each
principal owner. If an applicant selects more than one ethnicity or race for a
principal owner, the banking institution shall report each selected
designation. The banking institution shall also report any additional
information that the applicant has provided as free-form text in the
appropriate data reporting field.
(v) If an applicant provides ethnicity or
race information for one or more principal owners, the banking institution
shall report the ethnicity and race as provided by the applicant.
(vi) If the applicant declines to provide a
principal owner's ethnicity or race, the banking institution shall report that
the applicant declined to provide this information. The banking institution
shall report that the applicant declined to provide information only if the
applicant specifically declines to provide that information. If the applicant
does not respond to a request about a principal owner's ethnicity or race, the
banking institution shall report that the information was not provided by the
applicant. If an applicant provides some but not all of the requested ethnicity
and race information, the banking institution shall report the information that
was provided by the applicant and shall report that the applicant declined to
provide or did not provide (as applicable) the remainder of the
information.
(vii) If an applicant
provides information in response to the question requesting a given principal
owner's ethnicity or race and also indicates that the applicant does not wish
to provide the information, the banking institution shall report the
information on ethnicity or race that was provided by the applicant (rather
than reporting that the applicant declined to provide the
information).
(viii) If a banking
institution reports ethnicity or race information based on previously collected
data, the banking institution shall also report that it is providing that
information based on previously collected data.
(ix) If a banking institution reports one or
more principal owner's ethnicity or race information based on previously
collected data, the banking institution does not need to collect any additional
ethnicity or race information. However, the banking institution may need to
report that the applicant did not provide or declined to provide information
when the banking institution previously collected the data, as
applicable.
(6) Joint
applications from multiple entities. In the event of a single application from
multiple entities operating pursuant to a joint venture agreement or other form
of business combination, the banking institution shall obtain information
pursuant to this section for all entities participating in the
application.
(g)
Availability of information.
(1) Submission
to Department.
(i) The data required to be
compiled and maintained under this section by any banking institution shall be
submitted to the Department upon the Department's request.
(ii) Each banking institution shall submit to
the Department a copy of each report and document which it is required to
prepare and file with the Consumer Financial Protection Bureau and/or another
Federal agency by Section 704B of the Equal Credit Opportunity Act, codified at
15 USC §
1691c-2, as implemented by regulation, upon
the Department's request.
(2) Retention of information. Information
compiled and maintained under this section shall be retained by the banking
institution for not less than six years after the date of
preparation;
(3) Availability of
information. The Department and banking institutions will maintain any
information compiled under this section that could be used to identify any
applicant or their associated business as confidential, except as required by
federal law.
(h)
Alternative forms of compliance.
(1) The
Department may, at its discretion, determine that a banking institution's or
group of banking institutions' compliance with the requirements of Section 704B
of the Equal Credit Opportunity Act, codified at
15 USC §
1691c-2, as implemented by regulation, shall
constitute compliance with the data collection requirements of this
section.
(i) Application
defined. For the purposes of this section only, the term "application" means an
oral or written request by a business for a loan or other extension of credit
that is made in accordance with procedures used by a banking institution for
the type of credit requested, including such requests received by the banking
institution that are incomplete or subsequently withdrawn, and shall not mean
(i) reevaluation, extension, or renewal
requests on an existing business credit account, unless the request seeks
additional credit amounts, or
(ii)
inquiries and prequalification requests.
(j) Compliance Date and Transitional Period.
(1) The compliance date for Section
76.16 of this Part is six months
after the date of publication of the Notice of Adoption in the State
Register.
(2) Banking institutions
shall have an additional transition period of three months from the compliance
date of Section
76.16 to comply with the
requirements set forth in Section
76.16(d)(1) of
this Part to limit, where feasible, underwriter access to any information
provided by the applicant pursuant to a request under subdivision (b) of this
section. During this transition period, banking institutions that can feasibly
limit access, but need to make technological and process adjustments to do so,
may rely on Section
76.16(d)(2) of
this Part.