Industry Letter

Updates Regarding Exempt Funds

September 10, 2009

To The Institution Addressed:

Re: Updates Regarding Exempt Funds

In January, we issued an industry letter to notify all banking institutions doing business in New York of a new state law, the Exempt Income Protection Act (“EIPA”), which took effect January 1, 2009. The law, which amended Article 52 of the New York Civil Practice Law and Rules (“CPLR”), limits the ability of judgment creditors and others to restrain Social Security and other exempt funds.

We are releasing this update to make banks in New York aware of the following developments:

1. On May 4, 2009, the Governor signed into law a chapter amendment which excludes certain debts from the automatic exemption and notice provisions of EIPA. Those provisions do not apply when the State of New York, or any of its agencies or municipal corporations, is the judgment creditor, or if the debt enforced is for child support, spousal support, maintenance or alimony, provided that the restraining restraining notice or income execution contains a legend at the top in sixteen point bold type with the following language:

Banks should process restraints or income executions falling within these categories under the pre-EIPA procedures. In these circumstances, account holders still have the right to demonstrate that the funds that have been restrained or executed upon are statutorily exempt and, if so, to get these funds released.

2. Effective July 24, 2009, the minimum automatic exemption for all account holders increased from $1,716 to $1,740. This amount will be adjusted every three years, beginning on April 1, 2012, in accordance with the Consumer Price Index. The Banking Department will publish the new current dollar amount of the exemption at that time.

If you have questions related to this Industry Letter, please contact Jane Azia, Director of Non-Depository Institutions and Consumer Protection at (212) 709-3503 or [email protected].