Posts filed under ‘New York State’

Pulling The Plug On Fantasy Gambling

After Taking a day off to celebrate America’s De Facto national holiday  down on Long Island,  where the Fortieth Annual Meier Family Super Bowl Party was held, your faithful blogger is back  but still can’t get football completely out of his head.

First, I am still trying to figure out how the Denver Broncos won while demonstrating that the forward pass is overrated.  Secondly,  to me the most interesting banking news over the last few days was the fact that Ctitigroup announced late last week that it would be blocking debit and credit card transactions involving  fantasy sports sites Fan Duel and Draft Kings in New York pending the outcome of lawsuits challenging their legality .

The decision, coming as it did right before Super Bowl 50, was the real life equivalent of Scrooge Stealing all of the Who’s presents on Christmas Eve, at least for the tens of thousands of football fans who have deluded themselves into believing that there  is skill involve in playing fantasy football against a million of their closest friends.

(Incidentally who made the decision to stop denoting Super Bowl’s with Roman numerals? Could it be, as my brother-in-law suggested, that T.V, execs were afraid that the viewing public wouldn’t understand  that Super Bowl  L” was a really big deal?).

When last I wrote about this topic in November (, NY AG  Eric Schneiderman had sued to block  the companies from operating in our state.   NY law makes it illegal to gamble. The lottery is sanctioned by the State’s constitution for education funding. On December 11, New York Supreme Court Judge Manuel J. Mendez agreed with the AG but, moving quicker than a Payton Manning pass, which seems to take about 10 minutes to arrive in the vicinity of its intended receiver, New York’s appellate Division blocked the injunction pending its own decision which may take several months.

What perplexes me about Citi’s move is that nothing has publically changed which makes it any more vulnerable to executing fantasy sports transactions than it was a week ago. The Unlawful Internet Gambling Enforcement Act of 2006 (31 USCA Sec. 5301) banned using the Internet to make a bet or wager, but it stipulated that betting does not include participation in any fantasy or simulated sports games. (31 USCA Sec. 5362(ix)).  Instead it empowered states to define gambling in accordance with their own state laws. (31 U.S.C.A. § 5362(10) (West).   The AG argues that fantasy sports, as offered by these fantasy sites constitutes gambling as a matter of NY law.

Does this mean that the state legislature could preempt the court’s by passing a law clarifying that these online fantasy games are legal? Yes it does. If I were a gambling man my bet is that this is exactly what’s going to happen.

Vendor Management

Vendor management may be boring and time-consuming but with third-party due diligence being an increasingly important component of your compliance program a well-functioning system of vendor oversight will actually save your credit union $$$. Don’t take my word for it. Instead read this article in this morning’s American Banker which explains how $990 Somerset Trust  bank transformed its vendor management from a steel file cabinet and some spreadsheets to a streamlined system from which it recognized savings with software it developed in-house that organized  the process for collecting and accessing documents such as SASS audits.  The result:

“The bank figures the new software has brought about a 25% reduction in labor. Vendor meetings are more productive, the new vendor entry process is streamlined, data collection forms have been standardized, and tracking and monitoring are improved. Preparing for vendor meetings is easier and less time is needed to manage third-party relationships. Somerset Trust executives also say that by having internal programmers develop this technology, the bank saved five figures during implementation and thousands in monthly ongoing fees.”


February 9, 2016 at 9:25 am Leave a comment

3 Things You Need to Know


The Next Love Canal?

While the water problems in Flint, Michigan have understandably garnered the national spotlight, the potential that toxic dumping has been taking place in Hoosick Falls, New York is beginning to impact not only the community but lenders.

On Friday, the Albany Business Review reported that Trustco Bank and The Bank of Bennington have temporarily suspended mortgages in the village.  The announcement underscores that environmental problems inevitably have a banking component.  Obviously, problems like this make it almost impossible for homeowners in affected communities to sell their properties.  Less obvious is the fact that lenders could retroactively be made to buy back mortgages on property that is found to be contaminated.

I went back through my archives and as I explained in this blog about the potential risks of fracking, Fannie and Freddie have set up a system where lenders can be forced to buy back mortgage loans years after they were sold to the secondary market.  Let’s hope for the best in the case of Hoosick Falls.

CUSO Registration Takes Effect

For years now, our good friends at the NCUA have expressed concern that they don’t have adequate oversight over CUSOs.  Starting today, CUSOs, irrespective of whether they are owned by state or federal credit unions, must be registered with the NCUA.  As part of this new requirement, all CUSOs must now provide information directly to the agency.  I know this has been a real hot button issue for some credit unions, but the final regulation is much less onerous than what was initially proposed and, the more I look into this issue, the more I agree with NCUA.  It makes sense to increase its ability to assess the impact of CUSOs on the industry as a whole.

The Most Important Election

The election that will have the most direct and immediate impact on your credit union is not the one for President this November.  Governor Cuomo announced Saturday that a special election will be held on April 19 to fill the Senate and Assembly seats of Senator Dean Skelos, Republican and Assemblyman Sheldon Silver, Democrat.  Right now, the Republicans hold a one seat majority in the Senate chamber, but a victory by Assemblyman Todd Kaminsky would mean that the continuing control of Republicans is dependent on the continued support of the Independent Democratic Caucus.


February 1, 2016 at 7:46 am Leave a comment

Employers Placed Under Equal Pay Microscope

The latest in a series of proposed regulations in which the Government is seeking to intrude into the work place is set to be unveiled today. The Wall Street Journal reports that this morning the Equal Employment Opportunity Commission (EEOC) will be rolling out proposed regulations requiring employers to disclose to the Government a summary of pay data. This information will be used to target employers who may be violating federal law mandating equal pay for equal work. The rule would apply to employers with 100 or more employees. Lest you think you’re off the hook completely, keep reading.

The Government have been moving this direction for a while. Earlier this year, similar reporting requirements were imposed on federal contractors. On the State level, New York has already put in place new equal pay protections that could directly impact your credit union. On January 19, amendments to Section 194 of New York’s Labor Law took effect.

New York has long outlawed pay discrimination based on sex; however, it has authorized pay discrepancies so long as they are based on a seniority system; a merit system; a system that measures earnings by quality or quantity of production; or “any other factor other than sex.” As my wife just pointed out, this is a pretty broad exception. The Governor and the Legislature agreed, which is why that language has been removed. Instead, employers can now base pay on “a bona fide factor other than sex, such as education, training or experience.” Furthermore, these criteria can only be used to the extent that they are related to the job in question.

It remains to be seen how great an impact this change in language will have on New York State workplaces. Here’s a good blog on the issue posted by Bond, Schoeneck and King.

On that note, enjoy your weekend. Personally, I have to remember what people do on Sunday afternoons without football.

January 29, 2016 at 8:41 am 2 comments

Is The NY Middle Class Being Nickel And Dimed To Death?


The latest example of how the New York middle class is being pushed to the breaking point comes courtesy of Long Island.

It goes without saying that whenever politicians talk about holding the line on taxes, you can bet fees are going to go up; but my Long Island brethren are taking this to an extreme. The fees homeowners have to pay for processing real estate transactions in Nassau and Suffolk Counties are going through the roof.  Even if you are one of those Up-Staters, who proudly proclaim that they have never driven on the Long Island Expressway and never ever will, the story is worth noting.  Many counties across the state are both looking for funds and trying to keep taxes down.

Just how bad is it on Long Island? According to the January 15th issue of the Long Island Business News, 2016 has seen fees increase as much as 300 percent, causing closing costs to rise to as much as $2,000. According to the paper, real estate fees now cost the Nassau County home owner $1,920 in Nassau, $945.50 in Suffolk but only $345 in Westchester.  Just how ridiculous is it?  A Mortgage Satisfaction Letter now costs $570.50 in Nassau County and $245 in Suffolk but “only” $120 in Westchester and $112 in NYC.  It costs $645 to record a deed in Nassau, $315 in Suffolk but only $120 in Westchester.

I know some of you are saying that this is the price people choose to pay for living on Long Island; the problem is that these fees are inherently regressive. They have to be paid by everyone regardless of whether or not they scrimped and saved to buy a relatively modest starter home or their dream home.  Also, you are talking about areas that already have among the highest recording taxes in the nation.

Besides Nassau and Suffolk are extreme examples of what troubles me about the State as a whole. While there are many areas in the state where people can be assured of their kids getting a world-class education; the middle class is being nickeled and dimed out of existence and being forced to pay for the maintenance of government services that are simply not sustainable.  A nephew of mine in his twenties has moved to Austin and if I was in my twenties I would go south as well.  That’s where the growth is.  Low taxes and warm weather are an attractive combination.



January 26, 2016 at 9:34 am Leave a comment

NY Clarifies When A Mortgage is A Subprime Loan

NY’s Department of Financial services on Tuesday clarified the index to be used by lenders to determine if a residential mortgage loan is a subprime loan.

Under Banking law Section 6-M a subprime home loan “means a home loan in which the initial interest rate or the fully-indexed rate, whichever is higher, exceeds by more than one and three-quarters percentage points for a first-lien loan, or by more than three and three-quarters percentage points for a subordinate-lien loan, the average commitment rate for loans in the northeast region with a comparable duration to the duration of such home loan, as published by the Federal Home Loan Mortgage Corporation (herein “Freddie Mac”) in its weekly Primary Mortgage Market Survey (PMMS) posted in the week prior to the week in which the lender provides the ‘good faith estimate’”

The catch is that Freddie Mac sopped publishing the index on January 1st.  The DFS announced that in its place the Freddie Mac PMMS average commitment rate for loans in the United States should now be used as  the appropriate threshold.  The  1-year Average Prime Offer Rate, as published by the Federal Financial Institutions Examination Council, is now “ the appropriate metric for calculating the subprime threshold for loans with a fixed rate of less than three years.” (

The Point will be providing more of the specifics on the memo and I know our Compliance department will also be spreading the word as well so I am going to pull back the lens a little. There is an assumption on the part of some federal credit unions that they are automatically not subject to state laws.  Categorical assumptions of this kind are dangerous.  For instance 6-M applies to “exempt organizations” which state law defines as including both state and federal banks and credit unions.   (N.Y.Banking Law § 590 (1)€ (McKinney).

Sure,  NCUA has  broad preemption powers.  For instance,  it has repeatedly   explained in opinions  of counsel that it has  the  authority to  preempt “any state law” purporting to limit or affect rates of interest and amounts of finance charges”. But New York law doesn’t limit what mortgage rates can be charged but simply imposes additional disclosure requirements on subprime lenders. Besides NCUA has never opined that 6-M is preempted by federal law. (

One more thing:  Don’t  assume that your credit union doesn’t  make subprime loans. With interest rates  at historic lows it is surprisingly easy to trigger the NY  tripwire. If you aren’t running your rates against the 6-M criteria you should be.

January 21, 2016 at 8:56 am Leave a comment

A First Look At The Governor’s Spending Plan

Well the annual game of  “Where’s Waldo?” known as the NYS budget process began officially yesterday as the Governor merged his State-Of-The State Address with the unveiling of his Executive Budget proposal for the 2016-17 Fiscal year that begins April 1st.  I’ve just started looking at it, but here is the big picture stuff.

  • The Governor’s proposed budget at $145.3 billion is a 1.7% increase over last year. If this limit is honored, the  Governor’s streak of limiting budget increases to 2 percent or less will continue. In his response to the Governor’s proposal, Senate Majority Leader John Flanagan proposed putting the cap in law.
  • The proposed All Funds appropriation for the Department of Financial Services is $410.96 million, a $14.6 million decrease from FY 2016 which the Department attributes to health insurance savings. (
  • The Governor’s agenda, would have a big impact on credit unions as employers. His top priorities include raising the state’s minimum wage to $15.00 an hour. He also spent time talking about the need for paid family leave. Under the Governor’s proposal, New York State’s Paid Family Leave Program would provide twelve weeks of job-protected, employee funded leave to be used for bonding with a new child or caring for a sick relative.
  • The Governor included ethics reform in his budget. He would seek to limit the amount of outside income that legislators can make.
  • How much money to spend on education and how the money gets distributed is always the top issue in New York’s budget negations and this year is no exception. This year’s big education issue is the Gap Elimination Adjustment. The State traditionally strived to insure that no school district received less in state aid than it had the year before. However, starting in 2009 when it was faced with a multi-billion dollar deficit, the State shifted approximately $434 million in money that districts would have gotten under the state aid formula and reallocated these funds to help fill the state’s budget hole.




January 14, 2016 at 9:35 am Leave a comment

Hiring an Intern? Things to Consider.

Internships are all the rage.  For example, my niece and nephew both attended Northeastern University, where admission standards have sky rocketed over the last few years largely in response to the school’s heavy emphasis on work co-ops.  In this tough economy parents and students understandably love the idea of getting a leg up on the competition by getting real life experience and making contacts that could lead to future employment.

That’s nice Henry, but what does that have to do with the price of tea in China, you may ask.  Well, I am assuming that a fair number of credit unions either hire interns or are considering doing so. Besides, I overhead the Association’s HR guru Chris Pajak fielding a question on this very issue the other day and I thought it was an intriguing issue.  I’m here to remind you that rising interest in internships is growing hand in hand with increased legal scrutiny of what interns can and cannot do.

Most importantly, disgruntled interns have brought lawsuits claiming that they were actually employees and should have been treated as such under the Fair Labor Standards Act.  The bad news is that there are no hard and fast rules to determine when an intern is actually an employee.  The good news is, as explained in a recent article in the Legal Intelligencer, that the Second Circuit has provided employers with several criteria to be considered when determining if an intern is properly classified.  These criteria include the extent to which: the intern clearly understands that there is no expectation of compensation; the internship provides training similar to that provided in an educational environment; the internship is tied to the intern’s formal education program, such as through coursework and the receipt of academic credit; the internship accommodates the intern’s academic commitments; the intern’s work complements rather than replaces an existing employee; the internship’s duration is tied to beneficial learning; and the employer and intern understand that the internship is being conducted without the assurance of a job at its conclusion.

Now remember, these are criteria, not requirements, which means that not every single one of these elements have to be present for you to legally provide someone an interning opportunity.  The overriding gist of cases that have reviewed this issue is that employers have to be able to demonstrate that an intern is receiving academic benefit, and not simply being used to substitute for an employee.

Congressman Israel to Retire

Eight term Long Island Congressman Steve Israel announced that he would not be seeking re-election.  One of his goals apparently is to have more time to write the Great American Novel.  According to the Huffington Post, he plans to write a satire on the gun lobby. His district represents Northern Long Island and part of Queens.  Best of luck, Congressman.

January 8, 2016 at 9:00 am Leave a comment

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Authored By:

Henry Meier, Esq., Associate General Counsel, New York Credit Union Association

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