(a) Section 352(b) of the Banking Law provides that a licensed lender may not “induce or permit any person, nor any husband and wife jointly or severally, to become obligated, directly or contingently, or both, under more than one contract of loan at the same time, for the purpose or with the result of obtaining a higher rate of interest than would otherwise be permitted by this section”. This prohibits a licensed lender from inducing or permitting husband and wife to enter into multiple loan agreements if the purpose or result is to obtain a rate of interest higher than would be permissible if only one loan agreement were made. Since the interest rates which licensed lenders may charge decline as the amount of the loan increases, a licensee would earn greater interest from multiple loans than from a single loan and might attempt to structure a singe loan as a multiple loan in the absence of such a provision.

(b) The Federal Equal Credit Opportunity Act and Regulation B, which was promulgated pursuant thereto, expressly preempt “any provision of State law which prohibits the separate extension of consumer credit” to spouses if “each spouse voluntarily applies for separate credit from the same creditor”. Thus, Regulation B preempts so much of section 352(b) as prohibits a licensee from permitting a husband and wife to enter into separate loan agreements with the same licensee. By its terms, however, section 202.8(a) of Regulation B does not apply to a situation in which a licensee induces a husband and wife to enter into separate loan agreements.

(c) The result of the interplay of the two provisions is that the language of section 352(b) quoted above should be understood as follows: