Bill Text: NY S02520 | 2019-2020 | General Assembly | Introduced

Bill Title: Establishes the federal shutdown affected employees loan program.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2019-01-25 - REFERRED TO BANKS [S02520 Detail]

Download: New_York-2019-S02520-Introduced.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                    IN SENATE
                                    January 25, 2019
        Introduced  by Sen. HARCKHAM -- read twice and ordered printed, and when
          printed to be committed to the Committee on Banks
        AN ACT establishing the federal shutdown affected employees loan program
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section 1. Definitions. As used in this act, the following terms shall
     2  have the following meanings:
     3    (a) "Affected employee" means a federal employee who, during the shut-
     4  down,  is  (i)  a resident of this state, and (ii) required to work as a
     5  federal employee without pay or furloughed as a federal employee without
     6  pay;
     7    (b) "Bank" means a bank as such term is defined in  subdivision  1  of
     8  section 2 of the banking law;
     9    (c)  "Credit  union"  means  a credit union as such term is defined in
    10  subdivision 9 of section 2 of the banking law;
    11    (d) "Department" means the department of financial services;
    12    (e) "Eligible financial institution" means a bank or credit union that
    13  has a physical presence in this state and is in good standing;
    14    (f) "Grace period" means  the  ninety-day  period  after  an  affected
    15  employee's federal agency is funded; and
    16    (g)  "Shutdown"  means the federal fiscal year 2019 partial government
    17  shutdown that began on December 22, 2018.
    18    § 2. Federal shutdown affected employee loan program. (a) The  depart-
    19  ment  shall administer a federal shutdown affected employee loan program
    20  to guarantee the repayment of loans made by an eligible financial insti-
    21  tution to an eligible affected employee pursuant to this act.    Subject
    22  to the cessation of new claim approvals under subdivision (d) of section
    23  five of this act, the department shall submit all approved claims to the
    24  comptroller,  who  shall  pay  from  the general fund any and all claims
    25  submitted by the department.
    26    (b) Any bank or credit union may apply to the  department  to  partic-
    27  ipate  in  the  loan  guarantee program. Not later than one business day
    28  after receiving the application, the department shall determine  whether
    29  the financial institution is an eligible financial institution and imme-
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 2520                             2
     1  diately  notify  the  bank  or  credit  union of such determination. Any
     2  eligible financial institution may make loans to affected  employees  in
     3  accordance with this act.
     4    (c)  Each eligible financial institution that makes a loan pursuant to
     5  this act, shall notify the department in  writing  not  later  than  one
     6  business  day  after  making the loan, specifying such information about
     7  the borrower as the department may request.
     8    § 3. Loan eligibility. An eligible financial institution  may  make  a
     9  loan to an affected employee, provided:
    10    (a)  The  affected  employee  has  provided  to the eligible financial
    11  institution (i) proof of the employee's status, income and residence  in
    12  this  state,  and  (ii) the amount of unemployment compensation benefits
    13  the employee has received and has been deemed eligible to receive during
    14  the shutdown. Such proof may include a  paystub  or  bank  statement,  a
    15  federal  employee  identification  card,  the federal tax identification
    16  number of the employee's  employer  and  a  sworn  affidavit  from  such
    17  employee  indicating  that  such  employee  (A)  is  currently a federal
    18  employee residing in this state, (B) may be eligible to receive back-pay
    19  when the shutdown ends, and (C) is not receiving a loan from  any  other
    20  financial institution pursuant to this act.
    21    (b) The amount of the loan shall not exceed (i) the lesser of (A) five
    22  thousand  dollars,  or  (B)  the affected employee's most recent monthly
    23  after-tax pay, (ii) less four times the amount,  if  any,  the  affected
    24  employee has reported to the eligible financial institution under subdi-
    25  vision  (a)  of  this section related to any weekly unemployment compen-
    26  sation benefits the employee has received or has been deemed eligible to
    27  receive during the shutdown.
    28    (c) The loan is made in accordance with the eligible financial  insti-
    29  tution's  underwriting  policy  and standards, provided further that the
    30  affected employee's creditworthiness shall not be a factor used for  the
    31  purposes of determining eligibility.
    32    (d)  The  loan  agreement  shall  not (i) require repayment during the
    33  grace period, or (ii) charge interest on the principal amount before  or
    34  during  the  grace period or for one hundred eighty days after the grace
    35  period, provided after such one hundred eighty-day period, the  eligible
    36  financial  institution  may  charge  interest or fees in accordance with
    37  such financial institution's lending policy and the terms of the  under-
    38  lying loan agreement.
    39    (e)  The loan agreement shall require that the affected employee repay
    40  the loan in full not later than one hundred eighty days after the end of
    41  the grace period by making at least three, and no more than  six,  equal
    42  installment  payments.  The  loan  agreement  shall not contain a fee or
    43  penalty for the prepayment or early payment of the loan.
    44    (f) The eligible financial institution shall offer  credit  counseling
    45  services or refer such employee to nonprofit credit counselors.
    46    §  4.  Additional  loans. An affected employee who has received a loan
    47  pursuant to this act may apply to the same eligible  financial  institu-
    48  tion  for  an  additional  loan for each thirty-day period such employee
    49  remains an affected employee, provided no affected employee may  receive
    50  more than three loans under the program, and each such employee shall be
    51  required  to  update the eligible financial institution as to the amount
    52  of unemployment compensation benefits the employee has received and  has
    53  been  deemed  eligible  to  receive during the shutdown. Each additional
    54  loan shall be made in accordance with section three of this act.
    55    § 5. Collection of loans. (a) On and after  one  hundred  eighty  days
    56  from the end of the grace period, an eligible financial institution that

        S. 2520                             3
     1  has made a good-faith effort to collect the outstanding principal from a
     2  loan  issued pursuant to this act may make a claim to the department for
     3  recovery of an amount equal to the outstanding principal for such  loan.
     4  Prior  to the department's approving and submitting a claim to the comp-
     5  troller, such eligible financial institution shall  demonstrate  to  the
     6  satisfaction  of  the department that the eligible financial institution
     7  has made a good-faith effort to collect the outstanding  principal  from
     8  the  eligible  employee  in accordance with such financial institution's
     9  loan servicing and collection policies. Upon payment  of  a  claim,  the
    10  loan  shall  be assigned to the state, and the department shall have the
    11  right to continue collection efforts on the loan.
    12    (b) The department shall maintain records in  the  regular  course  of
    13  administration  of  the  loan  guarantee  program, including a record of
    14  loans issued and of payments made to honor loan guarantees issued  under
    15  this  section.  The  department  shall  regularly review such records to
    16  determine total loans issued and identify duplicative applications.  The
    17  department  shall  report  to  the  department of labor the names of the
    18  affected employees who have received a loan under the program,  and  the
    19  department of labor shall provide to the department information concern-
    20  ing  such  employees' unemployment compensation benefits. If the depart-
    21  ment determines that an affected  employee  misrepresented  unemployment
    22  compensation  benefits,  the  affected employee may be deemed ineligible
    23  for additional loans under this act.
    24    (c) The department may terminate any loan guarantee  if  the  eligible
    25  financial  institution  misrepresents  any information pertaining to the
    26  guarantee or fails to comply with any requirements of  this  section  in
    27  connection with the guarantee of the underlying loan.
    28    (d) If the amounts expended to honor loan guarantees under the program
    29  exceed  ten  percent  of  total loans issued, the department shall imme-
    30  diately cease to approve claims and shall  notify  the  comptroller  and
    31  each eligible financial institution of the total amount of payments made
    32  and that the department has ceased honoring loan guarantees.
    33    (e)  Any  interest  deferred  or  not charged related to a loan issued
    34  pursuant to this act shall be exempt from all state taxes  that  may  be
    35  applicable  to  such  interest  amounts  as  they  relate to an affected
    36  employee.  Eligible financial institutions shall  disclose  to  affected
    37  employee  borrowers in the signed affidavit or loan documents that there
    38  may be federal tax consequences to the program loans.
    39    (f) No new loan applications shall  be  submitted  under  the  program
    40  after  the shutdown ends. The program shall expire upon the repayment of
    41  all loans made under the program and, for  all  loans  in  default,  the
    42  repayment  of  claims  made  under  the program, or the cessation of new
    43  claim approvals under subdivision (d) of this section.
    44    § 6. Unemployment benefits. Upon the passage of federal legislation or
    45  the issuance of federal guidance from the United  States  department  of
    46  labor  or  another  federal  agency which allows an affected employee to
    47  receive benefits, such affected employee may be eligible  for  unemploy-
    48  ment  benefits  pursuant  to such federal legislation or guidance during
    49  the period of the shutdown. If the shutdown ends and an affected employ-
    50  ee is paid by the federal government for any period of time the affected
    51  employee worked without pay during the shutdown, the  affected  employee
    52  shall  reimburse  the  unemployment insurance fund in an amount equal to
    53  the unemployment benefits the affected employee received for the  period
    54  of the shutdown.
    55    § 7. This act shall take effect immediately.