Bill Text: NY A03246 | 2023-2024 | General Assembly | Amended
Bill Title: Allows credit unions, savings banks, savings and loan associations and federal savings associations to accept and secure deposits from municipal corporations.
Spectrum: Strong Partisan Bill (Democrat 10-1)
Status: (Introduced) 2024-01-03 - referred to banks [A03246 Detail]
Download: New_York-2023-A03246-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 3246--A 2023-2024 Regular Sessions IN ASSEMBLY February 2, 2023 ___________ Introduced by M. of A. HUNTER, FAHY, DICKENS, LAVINE, SAYEGH, JACOBSON, WEPRIN, BURDICK, SLATER -- read once and referred to the Committee on Banks -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general municipal law and the banking law, in relation to allowing credit unions, savings banks, savings and loan associations and federal savings associations to accept and secure deposits from municipal corporations; to direct the department of financial services to conduct a study and issue a report concerning the impact of allowing certain financial institutions to accept local government public deposits; and providing for the repeal of certain provisions upon the expiration thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph d of subdivision 1 of section 10 of the general 2 municipal law, as amended by chapter 623 of the laws of 1998, is amended 3 to read as follows: 4 d. "Bank" shall mean a bank as defined by the banking law or a 5 national banking association located and authorized to do business in 6 New York; a savings bank as defined by the banking law, a savings and 7 loan association as defined by the banking law or a federal savings 8 association located and authorized to do business in New York which has 9 its principal office in a location described in paragraph (a) of subdi- 10 vision two of section two hundred thirty-seven of the banking law, or a 11 branch office in a location described in paragraph (b) of subdivision 12 two of section two hundred thirty-seven of the banking law. 13 § 2. Section 10 of the general municipal law is amended by adding a 14 new subdivision 5 to read as follows: 15 5. In addition to the financial institutions authorized to accept 16 public deposits in subdivision two of this section, credit unions, as 17 defined by the banking law or a federal credit union located and author- EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD04168-03-3A. 3246--A 2 1 ized to do business in New York which has its principal office in a 2 location described in paragraph (a) of subdivision thirty-eight of 3 section four hundred fifty-four of the banking law, or a branch office 4 in a location described in paragraph (b) of subdivision thirty-eight of 5 section four hundred fifty-four of the banking law, may accept public 6 deposits by a local government subject to the limitations set forth 7 herein. For the calendar year beginning January first, two thousand 8 twenty-four, the governing board of a local government may designate one 9 or more credit unions, for the deposit of public funds in an amount not 10 to exceed five hundred thousand dollars in each institution. For the 11 calendar year beginning January first, two thousand twenty-five, the 12 governing board of a local government may designate one or more credit 13 unions for the deposit of public funds in an amount not to exceed one 14 million dollars in each institution. For the calendar year beginning 15 January first, two thousand twenty-six, the governing board of a local 16 government may designate one or more credit unions for the deposit of 17 public funds in an amount not to exceed two million dollars in each 18 institution. For the calendar year beginning January first, two thou- 19 sand twenty-seven, the governing board of a local government may desig- 20 nate one or more credit unions for the deposit of public funds in an 21 amount not to exceed three million dollars in each institution. For the 22 calendar year beginning January first, two thousand twenty-eight, the 23 governing board of a local government may designate one or more credit 24 unions for the deposit of public funds in an amount not to exceed four 25 million dollars in each institution. For the calendar year beginning 26 January first, two thousand twenty-nine, the governing board of a local 27 government may designate one or more credit unions for the deposit of 28 public funds in an amount not to exceed five million dollars in each 29 institution. For the purposes of this section, a deposit limit shall 30 mean the maximum amount of all funds of a local government in an insti- 31 tution based on a daily account balance excluding any accrued interest. 32 § 3. Section 454 of the banking law is amended by adding a new subdi- 33 vision 38 to read as follows: 34 38. (a) To accept deposits for credit to a local government, as 35 defined in paragraph a of subdivision one of section ten of the general 36 municipal law, at its principal office where such credit union maintains 37 its principal office within the jurisdiction of such local government. 38 (b) To accept deposits for credit to a local government, as defined in 39 paragraph a of subdivision one of section ten of the general municipal 40 law, at its branch office where such credit union maintains a branch 41 office within the jurisdiction of such local government. 42 § 4. The banking law is amended by adding a new section 454-a to read 43 as follows: 44 § 454-a. Deposits of public money with credit unions; security. A 45 credit union may accept deposits of public money subject to the limita- 46 tions provided in subdivision thirty-eight of section four hundred 47 fifty-four of this article. Such credit union shall pledge assets or 48 furnish other security satisfactory in form and amount to the depositor, 49 for the repayment of monies held in the name of such depositor, when 50 required to be secured by applicable law, decree or regulation. 51 § 5. The banking law is amended by adding a new section 454-b to read 52 as follows: 53 § 454-b. Community investment by credit union; condition of accepting 54 municipal deposits. 1. If the average daily balance of the municipal 55 funds on deposit at the credit union for the preceding year is in excess 56 of three hundred thousand dollars, the chief financial officer, or theA. 3246--A 3 1 senior official in the credit union with responsibility for performing 2 the functions of a chief financial officer of a credit union that choos- 3 es to accept municipal deposits pursuant to section ten of the general 4 municipal law, shall, consistent with safety and soundness, transmit to 5 the department by December thirty-first each year, a written certif- 6 ication, in a form specified by the superintendent and posted on the 7 department's website, that the credit union has invested into the commu- 8 nity, pursuant to this section, a sum equal to the average daily 9 balance, multiplied by a factor of .0035, provided, however, in no 10 event, shall a credit union be required to contribute a sum in excess of 11 one hundred thousand dollars in any one year. 12 2. The community investment described in subdivision one of this 13 section shall be used to support any of the following purposes, as 14 determined by the credit union, in any community where such credit union 15 has authority to provide services, provided the credit union shall 16 prioritize low-income communities when choosing where to invest: 17 (a) minority and women-owned business enterprises in the community; or 18 (b) affordable housing (including multifamily rental housing) for low- 19 and moderate-income individuals in the community; or 20 (c) community services targeted to low- and moderate-income individ- 21 uals in the community; or 22 (d) activities that revitalize or stabilize the community including 23 low- or moderate-income geographies, or designated disaster areas; or 24 (e) financial literacy. 25 3. For purposes of the community investment pursuant to this section, 26 field of membership restrictions shall not apply. 27 § 6. Subdivision 2 of section 237 of the banking law, as amended by 28 chapter 360 of the laws of 1984, is amended to read as follows: 29 2. [No savings bank shall accept any deposit for credit to any munici-30pal corporation.] (a) A savings bank which maintains its principal 31 office within the jurisdiction of a local government, as defined in 32 paragraph a of subdivision one of section ten of the general municipal 33 law, may accept deposits at such principal office for credit to such 34 local government. 35 (b) A savings bank which maintains a branch office within the juris- 36 diction of a local government, as defined in paragraph a of subdivision 37 one of section ten of the general municipal law, may accept deposits at 38 such branch office for credit to such local government. 39 § 7. Section 234 of the banking law is amended by adding a new subdi- 40 vision 27 to read as follows: 41 27. Pursuant to subdivision two of section two hundred thirty-seven of 42 this article, to pledge assets or furnish other security satisfactory in 43 form and amount to the depositor, for the repayment of monies held in 44 the name of such depositor, when required to be secured by applicable 45 law, decree or regulation and to exercise the powers contained in 46 section ninety-six-b of this chapter. 47 § 8. Section 383 of the banking law is amended by adding a new subdi- 48 vision 18 to read as follows: 49 18. Pursuant to subdivision two of section two hundred thirty-seven of 50 this chapter, to pledge assets or furnish other security satisfactory in 51 form and amount to the depositor, for the repayment of monies held in 52 the name of such depositor, when required to be secured by applicable 53 law, decree or regulation and to exercise the powers contained in 54 section ninety-six-b of this chapter. 55 § 9. 1. The department of financial services is hereby authorized and 56 directed to study and issue a public report with recommendations,A. 3246--A 4 1 concerning the impact of allowing credit unions, savings banks, savings 2 and loan associations or federal savings associations to accept local 3 government public deposits. This report shall be prepared in consulta- 4 tion with stakeholders, including local governments, banks, credit 5 unions, savings banks, savings and loan associations and federal savings 6 associations. 7 2. On or before January 1, 2029, the superintendent of financial 8 services shall submit to the governor, the temporary president of the 9 senate, the speaker of the assembly, the chair of the senate standing 10 committee on banks, and the chair of the assembly standing committee on 11 banks, a written report detailing the findings and recommendations on 12 the department's study performed in accordance with subdivision one of 13 this section. The superintendent shall use reasonable efforts to identi- 14 fy any impacts by expanding the financial institutions eligible to 15 accept municipal deposits and shall include the following information in 16 the report: 17 (a) An analysis of deposits held in banks including the size of the 18 bank's assets, location of banks, type of bank charter, changes in the 19 amount of commercial bank held deposits from the effective date of this 20 act and overall impact on banking industry, in particular small communi- 21 ty banks. 22 (b) The growth of municipal deposits held in credit unions, savings 23 banks, savings and loan associations or federal savings associations 24 after the effective date of this act. 25 § 10. Section 86 of the banking law, as amended by chapter 274 of the 26 laws of 2007, is amended to read as follows: 27 § 86. Eligibility. 1. For the purposes of this article, the term 28 "community bank institution" shall mean any state or federally chartered 29 banking institution and shall include any bank, trust company, savings 30 bank or savings and loan association with less than ten billion dollars 31 in assets that is headquartered in this state and whose predominant 32 retail and commercial banking operations serve residents and businesses 33 of this state, as determined by the superintendent in his or her sole 34 discretion and pursuant to such rules and regulations as the superinten- 35 dent deems necessary to implement and administer these provisions. 36 2. To be eligible to receive deposits, or to renew existing deposits 37 under this program[, a bank, trust company, savings bank or savings and38loan association: (a) must be chartered under the provisions of this39chapter and (b)] a community bank institution: 40 (a) must have a current CRA rating of satisfactory or better. The 41 superintendent shall, if requested by the state comptroller or the 42 commissioner of taxation and finance, confirm whether a particular bank- 43 ing institution meets the criteria specified in this section; and 44 (b) meet any additional criteria established by the comptroller and 45 the commissioner of taxation and finance to determine eligibility for 46 participation in the program. Such criteria may include an institution's 47 loan to deposit ratio, its record of small business lending, and the 48 impact such deposits would have on an area's economic activity. 49 [2. A federal bank, trust company, savings bank or savings and loan50association may also be eligible to receive deposits, or to renew exist-51ing deposits, under this program if: (a) its principal office is located52in this state; (b) it has a current CRA rating of satisfactory or53better; and (c) it meets any additional criteria established by the54comptroller and the commissioner of taxation and finance to determine55eligibility for participation in the program. Such criteria may include56an institution's loan to deposit ratio, its record of small businessA. 3246--A 5 1lending, and the impact such deposits would have on an area's economic2activity.] 3 § 11. Section 87 of the banking law, as amended by chapter 274 of the 4 laws of 2007, subdivision 2 as amended by chapter 495 of the laws of 5 2013, is amended to read as follows: 6 § 87. Deposits. 1. Notwithstanding any provisions of law to the 7 contrary, the state comptroller and the commissioner of taxation and 8 finance shall, for the purposes of administering moneys in accordance 9 with the provisions of sections ninety-eight-a and one hundred five of 10 the state finance law, give consideration to depositing funds into those 11 community banking institutions which are deemed eligible to receive 12 deposits pursuant to section eighty-six of this article. 13 2. The maximum amount of funds which the state comptroller and the 14 commissioner of taxation and finance may deposit under this program 15 shall not exceed [two] three hundred [fifty] million dollars each. [The16maximum amount of funds on deposit at a community banking institution17shall not exceed twenty million dollars.] 18 3. Notwithstanding any provision of law to the contrary, any deposits 19 made pursuant to this article shall be made at rates, and for such peri- 20 ods of time, as may be agreed to by the state comptroller or the commis- 21 sioner of taxation and finance and the eligible community banking insti- 22 tution. 23 4. Any deposits made pursuant to this article may be secured by an 24 irrevocable letter of credit issued by a federal home loan bank. 25 5. The comptroller and the commissioner of taxation and finance shall 26 annually submit a joint report to the governor, the temporary president 27 of the senate, the speaker of the assembly, the chair of the senate 28 finance committee, the chair of the assembly ways and means committee, 29 the chair of the senate standing committee on banks, and the chair of 30 the assembly standing committee on banks on the efficacy of the communi- 31 ty bank deposit program, including information on the number of quali- 32 fied community banking institutions, the number of community banking 33 institutions which have received deposits, the size of each participat- 34 ing community bank, the number and amount of such deposits and the 35 percentage of total state funds deposited in such institutions under 36 this program. 37 § 12. No municipal deposits held in credit unions by local governments 38 on December 31, 2029 shall be required to be withdrawn upon the expira- 39 tion of this act. 40 § 13. This act shall take effect on the ninetieth day after it shall 41 have become a law; provided that sections two, three, four, five and 42 nine of this act shall expire and be deemed repealed December 31, 2029.
