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Astoria Federal Savings Bank will triple the interest rate it pays on tenant security deposit accounts, from .4 percent to 1.2 percent, Attorney General Eliot Spitzer announced last this week. The change followed an investigation by the Attorney General’s office into some landlords’ careless habit of putting tenant security deposits in accounts yielding low interest rates, which violates a New York State law saying such deposits must be kept in accounts that pay the “prevailing rate of interest.” Landlords, in turn, are allowed to keep one percent of the deposit to cover administrative costs. Spitzer’s inquiry discovered 90 landlords who had placed more than $6 million in security deposits in Astoria; at just .4 percent, Astoria Federal Savings Bank’s was paying one of the lowest interest rates in the state. The Attorney General has also proposed legislation in Albany to fix landlords’ administrative fees at 20 percent of the interest earned on accounts, giving landlords a financial incentive to seek out the highest interest-bearing accounts available. [9/27/04]

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