Pennsylvania Code › Title 10 - BANKING AND SECURITIES › Part II - Bureau of Banks › Chapter 13 - LOANS › SIMPLIFICATION AND AVAILABILITY OF BANK CREDIT-STATEMENT OF POLICY › Section 13.51 - Application of the Simplification and Availability of Bank Credit Act (SABCA)-Statement of Policy

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
Coverage of the SABCA.
(1)
				  The SABCA, enacted December 28, 1994, with an effective date of March 28, 1995,
				  amended Chapter 3 of the act by adding a new section 322 (7 P. S. §
												322). Chapter 3 of the act (7 P. S.
				  §§
												301-321) contains a number of
				  individual sections which provide institutions to which it applies the
				  authority to make loans subject to specific restrictions. The enactment of
				  successive sections of Chapter 3 over time, and amendments to them, have been
				  designed to afford institutions the maximum amount of flexibility in designing
				  credit products to meet the convenience and needs of the financial services
				  marketplace.
(2) Individual
				  sections of Chapter 3 of the act which deal with lending powers and charges are
				  alternative bases for extensions of credit and have been consistently
				  interpreted as such by the Department. Section 322 is an optional basis for
				  lending authority since section 322(d) is explicitly permissive with respect to
				  an institution's extension of credit under section 322. It is the position of
				  the Department that section 6 of the SABCA (7 P. S. §
												322 note) repealing acts and parts of acts
				  which are inconsistent with section 322 is not intended to repeal the
				  individual sections of Chapter 3 of the act which deal with lending powers and
				  charges, including section 319 of the act (7 P. S. §
												319).
(3) While section 322(b) provides that
				  section 322 "shall govern" (See subsection (c)(1)) all direct and indirect
				  extensions of credit by an institution, subject to enumerated exceptions, the
				  Department finds that the section was designed to make it clear that
				  institutions are authorized (not compelled) to use section 322, despite other
				  statutes that might otherwise be deemed to apply. Thus, section 322(b) confirms
				  that courts are not to apply Pennsylvania installment sales laws (such as the
				  Goods and Services Installment Sales Act (69 P. S. §§
												1101-2303) or the Home Improvement Finance
				  Act (73 P. S. §§
												500-101-500-602)) to invalidate
				  seller-assisted loans made under the authority of section 322 (See subsection
				  (c)(2)). An interpretation to the effect that section 322(b) exclusively
				  governs all extensions of credit would conflict directly with paramount Federal
				  law. Section 521 of the Depository Institutions Deregulation and Monetary
				  Control Act of 1980 (12
				  U.S.C.A. §
												1831d) and section 85 of the
				  National Bank Act (12
				  U.S.C.A. §
												85) authorize
				  Pennsylvania-chartered institutions and National banks to "borrow" the periodic
				  interest rates and other interest charges permitted by Pennsylvania law to
				  other borrowers, such as licensees under the Consumer Discount Company Act
				  (7 P.
				  S. §§
												6201-6219) and the Secondary
				  Mortgage Loan Act (7 P. S. §§
												6601-6626).
(4) The new section 322 does not purport to
				  be applicable to extensions of credit or agreements to extend credit under
				  open-end plans which are in effect prior to March 28, 1995. If, however, a
				  creditor has the specific ability to change the terms of an agreement in
				  existence prior to March 28, 1995, and the creditor elects to comply with
				  section 322, then section 322 will be applicable to that existing credit by
				  virtue of that election.