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Key Takeaways
On April 22, the NYDFS issued an industry letter reminding entities regulated under the New York Banking Law of their obligations under Section 296-a of the New York Executive Law, New York’s fair lending statute. The letter states that NYDFS may enforce state fair lending requirements and impose penalties for violations of federal fair lending laws.
The letter emphasizes NYDFS’s position that disparate impact theories remain actionable under New York Law. NYDFS reminded regulated entities that covered credit decisions resulting in a disparate impact may constitute unlawful discrimination under Section 296-a, including in connection with granting, withholding, extending, renewing, or setting the rates, terms, or conditions of credit. The Department also clarified that the letter does not establish new compliance obligations.
Putting It Into Practice: As the federal government pulls back on its fair lending oversight and enforcement (previously discussed here), the NYDFS’s letter is a reminder that state laws still remain on the books. Financial institutions and other regulated entities should monitor state-level fair lending developments and reassess compliance programs to ensure they remain aligned with evolving federal and state expectations.
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