Summary — Assembly Bill A773 (A773A / A773B)
Title: Relates to the use of automated lending decision‑making tools by banks for the purposes of making lending decisions
Primary sponsor: Assemblymember Linda Rosenthal; Cosponsor: Micah Lasher
Companion bill: S8115 (Senate)
Status (as of 2025-06-05): Reported; referred to Rules (most recent actions include amend & recommit to Codes, printings of 773A and 773B)
Note: The full bill text was not available in the materials provided. The summary below describes the bill’s purpose and the principal types of provisions it advances, based on the bill title and legislative action history. For precise statutory language and operative details, consult the official bill text on the legislature’s website.
Purpose / Intent
A773 is intended to regulate banks’ use of automated lending decision‑making tools (often described as algorithmic models, machine learning systems, or automated underwriting/credit-scoring tools) to ensure those tools are safe, explainable, non‑discriminatory, and administered with appropriate oversight and consumer protections when used to make lending decisions.
Key provisions (conceptual overview)
The bill seeks to establish requirements in the following areas:
- Definitions: Establishes what constitutes an “automated lending decision‑making tool” and related terms (e.g., “model,” “automated decision,” “material change”).
- Risk management and governance: Requires banks to maintain policies governing development, procurement, validation, monitoring, and governance of automated decision systems used for credit and lending.
- Testing and bias mitigation: Requires pre‑deployment testing and ongoing validation to detect disparate impact or discriminatory outcomes across protected classes and to document mitigation steps.
- Explainability and consumer notice: Requires banks to provide meaningful explanations to applicants/borrowers about adverse actions based on automated decisions and, in some cases, notice that an automated tool was used.
- Human oversight / ability to obtain review: Requires procedures for human review of automated decisions and an internal process for reconsideration where appropriate.
- Recordkeeping and audit trails: Mandates retention of documentation, data inputs, validation reports, and change logs sufficient to permit internal/external review and regulatory examination.
- Regulatory enforcement and examinations: Grants supervisory agencies authority to examine compliance, demand corrective action, and impose penalties or conditions if violations are found.
- Limited exemptions or scaled requirements: May include tailored rules for community banks or small lenders (typical in similar measures), or phase‑in timelines.
Who is affected
- Primary: State‑chartered banks and other banking institutions operating in New York that use automated systems in originating, underwriting, pricing, or denying loans.
- Secondary: Borrowers and applicants (improved transparency and recourse), third‑party vendors supplying automated decision tools (contractual and oversight obligations), and bank compliance, model risk, and IT teams (new processes, testing and documentation burdens).
Potential impact
- Consumer protections: Greater transparency and recourse when automated systems affect credit outcomes; reduced risk of discriminatory outcomes.
- Compliance costs: Banks will likely face increased costs for model validation, documentation, audits, legal review, and vendor management.
- Market/innovation effects: May encourage development of more explainable models and responsible‑AI practices; could raise barriers for small lenders depending on exemptions/scale provisions.
Procedural / timeline notes
- Introduced: January 8, 2025 (referred to the Assembly Banks Committee)
- Subsequent actions through June 5, 2025 include amendments, recommitments to Codes and Banks committees, printings of A773A and A773B, and most recently reported and referred to Rules.
- Companion Senate bill S8115 is active; final enactment would require passage by both houses and the Governor’s signature.
For exact obligations, enforcement provisions, exemptions, timelines, and statutory amendments, review the official bill text (A773A / A773B) and companion S8115. If you’d like, I can fetch and analyze the current full bill text and produce a clause‑by‑clause summary.
