S 8115: Relates to the use of automated lending decision-making tools by banks for the purposes of making lending decisions - New York

S8115B → S8115C · 2 edits

MINOR

The bill was renumbered from version B to version C and re-referred to the Committee on Banks. The most significant substantive change requires covered entities to hire an independent third party to conduct impact assessments on automated lending tools, whereas the previous version allowed internal individuals to perform this review.

Scope change

The bill's scope regarding which entities must conduct assessments remains unchanged, but the requirement for external, independent verification of those assessments has been added.

REQUIREMENT

Changed the requirement for impact assessments from being conducted by internal individuals to being conducted in collaboration with an independent third party.

TIMELINE

The bill was formally renumbered from S 8115-B to S 8115-C and re-referred to the Committee on Banks per Senate Rule 6.

S8115A → S8115B · 3 edits

MINOR

The bill was renumbered from version A to version B and reorganized to improve clarity. The most significant substantive change is expanding the definition of 'covered entities' to include licensed lenders under Article 9 of the Banking Law, thereby extending the automated lending rules to a broader range of financial institutions beyond just banking organizations.

Scope change

The bill's scope was expanded to include licensed lenders under Article 9 of the Banking Law in addition to existing banking organizations and foreign banking corporations.

DEFINITION

The definition of 'covered entity' was updated to explicitly include 'licensed lenders pursuant to article nine of this chapter,' broadening the entities subject to the new automated lending impact assessment requirements.

REQUIREMENT

The text was restructured and reordered to place the definition of 'covered entity' earlier in the document and to consolidate the list of required impact assessment report items for better readability.

TECHNICAL

Minor formatting adjustments were made, including updating the bill number from S. 8115-A to S. 8115-B and adjusting page headers and committee reporting language.

S8115 → S8115A · 4 edits

MODERATE

The bill was amended to broaden its scope and modernize its terminology, shifting from a narrow focus on 'automated decision tools' to a wider inclusion of 'automated lending decision-making tools.' The changes redefine the covered entities to include more types of lenders and expand the definition of a lending decision to cover various stages of the loan process, not just initial screening. Additionally, the required annual review was renamed from a 'disparate impact analysis' to an 'impact assessment,' which now includes broader requirements for testing cybersecurity, public health risks, and potential misuse.

Scope change

The bill's scope expanded from applying only to banks using specific computational processes to include a wider range of banking organizations, foreign banks, and licensed lenders. The definition of a 'lending decision' was also expanded to include determinations regarding loan terms, interest rates, and repayment, rather than just the initial screening of applicants.

DEFINITION

The term 'automated decision tool' was replaced with 'automated lending decision-making tool,' and the definition was updated to include software using algorithms, computational models, or AI to automate or replace human decision-making.

The definition of 'lending decision' was expanded from merely screening applicants to include any determination affecting loan approval, denial, terms, interest rates, or repayment.

SCOPE

New definitions were added for 'covered entity' and 'material change,' expanding the list of regulated organizations and clarifying when a tool update requires a new assessment.

REQUIREMENT

The requirement for an annual 'disparate impact analysis' was changed to an 'impact assessment' that must evaluate accuracy, fairness, cybersecurity vulnerabilities, public health risks, and potential misuse.

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

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