A 773: Relates to the use of automated lending decision-making tools by banks for the purposes of making lending decisions - New York

A773B → A773C · 3 edits

MINOR

This bill version adds a new co-sponsor, Lascher, to the legislation. The most significant substantive change requires covered entities to work with an independent third party to conduct impact assessments of their automated lending tools, whereas the previous version did not mandate third-party involvement. Additionally, a minor formatting adjustment was made to the list of protected characteristics in the bias testing requirements.

Scope change

The bill's scope of applicability remains unchanged, as the core definition of 'covered entities' and the general requirement for impact assessments are preserved.

REQUIREMENT

Added a mandatory requirement that covered entities must collaborate with an independent third party to conduct impact assessments of their automated lending decision-making tools.

TECHNICAL

Added a new co-sponsor, Assembly Member Lascher, to the bill's introduction record.

Adjusted the formatting of the list of protected characteristics in the bias testing section to include 'religion' on a separate line for clarity.

A773A → A773B · 3 edits

MINOR

The bill was amended to expand its scope by including licensed lenders under Article 9 of the Banking Law as 'covered entities,' requiring them to conduct impact assessments on automated lending tools. Additionally, the definition of 'adverse action' was adjusted to clarify that it includes determinations resulting in such actions, and the bill's title was slightly modified to include 'of' for grammatical correctness.

Scope change

The bill's applicability was expanded to include licensed lenders pursuant to Article 9 of the Banking Law, whereas the previous version excluded them from the definition of 'covered entity'.

ELIGIBILITY

The definition of 'covered entity' was updated to explicitly include 'licensed lenders pursuant to article nine of this chapter,' extending the bill's requirements to this specific group of lenders.

DEFINITION

The text defining 'adverse action' was restructured to clarify that the term applies to determinations that result in or may result in an adverse action as defined by federal law.

TECHNICAL

Minor formatting and grammatical adjustments were made, including adding the word 'of' in the title and correcting a pluralization error from 'licensed lender' to 'licensed lenders' in the definition.

A773 → A773A · 5 edits

MODERATE

The bill was amended to modernize terminology and significantly expand the scope of regulations regarding automated lending tools. The changes replace generic terms like 'decision tools' with specific definitions for 'automated lending decision-making tools' and 'covered entities,' ensuring the law applies to a broader range of financial institutions. Additionally, the requirements for impact assessments were broadened to include cybersecurity, public safety, and bias testing across more protected classes, while the notification process for applicants was removed.

Scope change

The bill's scope expanded from a narrow focus on 'banks' to include 'covered entities' such as foreign banking corporations, interstate branches, and licensed lenders, while explicitly excluding federal institutions. The definition of regulated tools was updated to cover modern software and AI techniques rather than just statistical modeling.

DEFINITION

Renamed 'automated decision tool' to 'automated lending decision-making tool' and updated the definition to explicitly include software using algorithms and AI techniques, while removing examples like junk email filters.

Added new definitions for 'adverse action' and 'material change' to clarify when assessments are required and how discrimination is legally defined.

SCOPE

Expanded applicability from just 'banks' to 'covered entities,' which now includes foreign banking corporations, interstate branches, and licensed lenders, while excluding federal banks and credit unions.

REQUIREMENT

Replaced the requirement for an annual 'disparate impact analysis' with a more comprehensive 'impact assessment' that must be conducted before any material changes to the tool and include cybersecurity, public safety, and bias testing.

Deleted the specific requirement for lenders to notify applicants 24 hours before using automated tools and the applicant's right to opt-out or appeal denials.

Relates to the use of automated lending decision-making tools by banks for the purposes of making lending decisions

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