The New York State Legislature adjourned Thursday morning without granting a permanent extension of interest rate deregulation sought by bankers.
Legislators, in an all-night session, instead extended the current law through the end of January. They tabled the permanent-extension bill to allow further debate over a package of consumer protection amendments.
"With additional time, we can end this thing and move forward," said Michael P. Smith, executive vice president of the New York State Bankers Association.
New York lifted an 18% interest rate ceiling in 1980 in an attempt to stem the flight of credit card operations to more lenient states. Chemical Banking Corp. and Keycorp run major credit card operations in the state.
Bankers argue a permanent extension will end the uncertainty over the law, which legislators have been forced to reconsider three times. That will make it easier for banks to develop business plans and help keep jobs in the state, Mr. Smith said.
Sidetracked by Other issues
The move for a permanent extension was sidetracked as legislators debated other controvesial issues, including the state's rent control law.
Mr. Smith said the permanent extension enjoys broad-based support, however.
Although the measure ultimately ran out of time in the Assembly, the state Senate overwhelmingly passed a permanent extension. And, Mr. Smith added, Gov. Mario Cuomo has recently spoken out in favor of it.
Mr. Smith said the permanent extension was likely to include some provisions acceptable to the association, such as a small business lending program, a requirement to provide checking services to the poor, and the establishment of a toll-free telephone number at the State Banking Department enabling consumers to obtain information about credit card rates and fees.
"We feel the momentum is to put it all together," he said. But "there are those who would try to put in restriction and regulation not acceptable with us."
One such proposal was a floating interest rate ceiling at eight percentage points above the discount rate for three month Treasury bills, or just over 11% at today's rates.