DFS superintendent urges Buy Now, Pay Later oversight, cites restitution, staffing needs at Senate hearing

Adrienne A. Harris, superintendent of the New York State Department of Financial Services (DFS), told the New York State Senate Banking Committee that DFS is expanding enforcement and seeking new authorities while continuing to press for more staff and faster review of filings.

"Things have been busy at DFS," Harris said, and later told senators the agency has "returned now over $630,000,000 to New York consumers in the form of restitution." She described recent enforcement work, staffing gains, proposed regulatory initiatives and remaining operational strains during a committee meeting in which senators also advanced multiple bills.

Harris said DFS hired roughly 550 new staff and promoted about 450 people since the 2023 banking crisis, but that the agency still needs more capacity to meet existing and new mandates. She said the agency will hit its current FTE cap of about 1,400 in July without additional authorization and has requested 500 more positions. "We will hit that cap in July of this year because we've slowed attrition," she said.

Why it matters: Harris framed the requests as necessary to maintain supervision, protect consumers and keep New York's financial markets resilient as federal examiner support declines. She urged lawmakers to consider agency resource needs when weighing new regulatory proposals.

Enforcement and restitution Harris described DFS enforcement since 2023 as robust: she said DFS has brought 11 enforcement actions in her tenure and cited a recovery involving the crypto firm Gemini that she said resulted in "$2,000,000,000 back to consumers around the world." She characterized the Gemini action as the result of insufficient diligence by a third‑party partner that later went bankrupt and held customer assets.

Consumer protection and rulemaking Harris outlined several regulatory priorities and proposals: - Buy Now, Pay Later (BNPL): Harris said the governor has proposed giving DFS authority to regulate BNPL products and transactions, a segment she described as largely unregulated nationwide. She warned consumer use of BNPL has expanded beyond large durable goods to everyday purchases and said DFS has prepared a "taxonomy" of business models and preliminary policy work. Harris told the committee BNPL authority would require legislation: "Buy now, pay later, we'll need the the governor's proposal in her budget to move legislation for that authority." - Overdraft and check‑cashing rules: Harris said recent DFS rule changes to check‑casher fee increases have saved New Yorkers about $22 million and that DFS has proposed new overdraft regulations to address exploitative fees. - Community Reinvestment Act (CRA) implementation: DFS has proposed regulations to apply CRA‑style obligations to nonbank mortgage lenders following a legislative change extending the law's scope.

Banking access and banking development districts Harris described a banking development district (BDD) program created under her tenure intended to encourage branch presence and community outreach by deposit institutions. She said DFS has created seven BDDs and that the comptroller will deposit about $10 million in state funds to support participating institutions. Senators representing neighborhoods with branch loss raised the BDD program as a tool to encourage more branches and community banking services.

Insurance market pressures and livery coverage Harris discussed insurance concerns affecting commuters and the livery market. She said several insurers dominating the livery market are deeply insolvent and named American Transit as "almost a billion dollars insolvent," noting its problems place half the state's livery market at risk if it ceased paying claims. Harris summarized governor's budget measures intended to attract more competition, including giving DFS rate‑setting authority in the livery market, allowing driver groups to diversify risk, and permitting flex rating within bands similar to private‑passenger insurance.

Commuter vans and captive insurers Harris said the state's commuter‑van subsidy grants (administered by Empire State Development, not DFS) are being distributed to subsidize insurance costs and safety upgrades. She said creating a captive insurer is complicated by statutory net‑worth requirements that effectively require $100 million in net worth for a captive, a threshold she said commuter‑van operators do not meet.

Operational tempo and backlog Harris said DFS has cleared roughly 30,000 aged filings in the past two years, largely on the insurance side, by instituting internal deadlines (she uses a 60‑day metric) and monthly reporting. She said the agency expects to eliminate the backlog of rate filings "probably by midyear," though the time frame depends on the filing type and company responsiveness.

Confidential supervisory information and a bank transaction When asked about the terms of a transaction between Catskill Hudson Bank and Hudson Valley Credit Union, Harris said details of supervisory reviews are typically confidential. She said the agency did, however, secure consumer protections during that transaction, including commitments that mortgage holders would not face interest‑rate hikes as a result of the merger.

Lawmakers advance bills The committee also read and advanced several bills. Senators moved and seconded the bills and called votes; in several cases the clerk recorded dissent as "two nays" without providing roll‑call counts in the hearing record. The measures reported out included a prohibition on state‑chartered banks financing private prisons, a requirement to include prepayment information in standard financial aid award letters, creation of a banking development district working group, required warnings for money transmitters, and a proposal to dedicate 10% of DFS fines to the Community Development Financial Institution fund.

Quotes Harris: "Things have been busy at DFS." Harris on restitution: "We returned now over $630,000,000 to New York consumers in the form of restitution." Harris on BNPL legislation: "Buy now, pay later, we'll need the the governor's proposal in her budget to move legislation for that authority."

Ending Harris closed by encouraging lawmakers to consult with her and DFS staff on proposals: "We're always here... feel free to reach out to Tanisha, to myself, anytime with any questions, any proposals that you all are thinking about, for the session." The committee chair said additional hearings on banking access and related topics will be scheduled.

Votes at a glance - S.114 (sponsor: Senator Clare) — "To prohibit state‑chartered banking institutions from investing in and providing financing for private prisons." Motion moved and seconded; reported out and passed in committee; hearing record notes two nays, exact yes count not specified. - S.1991 (sponsor: Senator Sanders) — "To include information concerning prepayments of outstanding loans in the standard financial aid award letter." Motion moved and seconded; passed (vote counts not specified). - S.2027 (sponsor: Senator Sanders) — "Create a banking development district working group; repeal on expiration." Motion moved and seconded; passed (no roll‑call counts recorded). - S.2040 (sponsor: Senator Jannarez) — "Require transmitters of money to provide a certain warning to consumers." Motion moved and seconded; reported out; hearing record notes two nays, exact yes count not specified. - S.2327 (sponsor: Senator Comrie) — "Amend banking and insurance law to dedicate 10% of fines imposed by the superintendent to the Community Development Financial Institution fund." Motion moved and seconded; passed (vote counts not specified).