Explanatory All Institutions Letter
April 13, 2006
TO THE INDIVIDUAL OR INSTITUTION ADDRESSED:
RE: Final Adoption of Amendments to Part 400.12 of the Superintendent’s Regulations (Licensed Cashers of Checks)
The attached amendments to Part 400.12 of the Superintendent’s Regulations were adopted on as a final rule, effective April 12, 2006. Emergency regulations in substantially similar form, which have been effective since December 5, 2005, will be allowed to expire.
Section 372 of the Banking Law requires the Superintendent of Banks to set the maximum fee that may be charged for cashing a check, draft or money order (collectively a “check”). In addition to an annual regional urban consumer price index (CPI-U) adjustment to account for normal inflationary increases experienced by the industry, Section 400.12 also provides that the Superintendent may subsequently modify the maximum fee at any time by regulation if the Superintendent finds that the adjustment is necessary and appropriate to protect the public interest and promote the stability of the industry in order to meet the needs of the communities served by the check cashing industry.
The check cashing industry provides valuable financial products to under banked communities and tends to serve a segment of the population that does not utilize traditional banking relationships. After a review caused by the Department’s initial imposition of annual general assessment charges upon licensed check cashers for the 2005-06 state fiscal year, the Department determined that the annual fee rate adjustment mechanism did not and will not adequately account for such cost increases, thus necessitating this rule making.
Please note that this fee increase will not be subject to further adjustment as a result of changes in the CPI-U.
Very truly yours,
Sam L. Abram
Secretary of the Banking Board