Banking Interpretations

BL 492(1)

November 27, 2006

Dear Mr. [---]:

I am writing to you in regard to the application of your client [---] LLC, to acquire control of a New York licensed sales finance company, [---] ("Bank").  The Bank is an industrial loan bank chartered under the laws of Utah and its deposits are insured by the FDIC.

The New York Banking Department is of the opinion that an insured out-of-state industrial loan bank should be treated in the same manner as other duly chartered out-of-state banking institutions with respect to being exempt from licensing under Article 11-B of the New York Banking Law. Specifically, in the past, the Legal Division of the Banking Department, has interpreted the provisions of Section 492(1) of the Banking Law as excluding out-of-state state chartered banks from the purview of Article 11-B.  A similar opinion regarding the need for a premium finance license under Article 12-B was also recently rendered. The omission of state chartered out-of-state banks in Section 492(1) reflects the absence of interstate branching at the time the law was enacted. It is our view that the legislature did not intend that highly regulated state chartered banking institutions that were overseen and examined by both a state banking department and the FDIC be subject to further regulation. Therefore, the Banking Department, in its 2007 legislative proposals, intends to recommend that the provisions of Section 492(1) be amended accordingly;

In view of the foregoing, the Banking Department requests that your client submit a letter to the Banking Department seeking withdrawal of its application to acquire control of the Bank under Article 11-B of the Banking Law. Additionally, the Licensed Financial Services Division will contact the Bank to request that it surrender its sales finance license.

Thank you for your assistance in this matter.

Very truly yours,

Steven Barras
First Assistant Counsel