Bill Text: NY A08145 | 2011-2012 | General Assembly | Introduced
Bill Title: Relates to credit union memberships and membership powers; sets forth the qualifications for membership in a credit union; and amends the powers of credit unions in relation to business loans, investment activities and other powers.
Sponsorship: Partisan Bill (Democrat 7)
Status: (Introduced - Dead) 2012-06-06 - print number 8145c [A08145 Detail]
Download: New_York-2011-A08145-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
8145
2011-2012 Regular Sessions
I N A S S E M B L Y
June 2, 2011
___________
Introduced by M. of A. JEFFRIES -- read once and referred to the Commit-
tee on Banks
AN ACT to amend the banking law, in relation to credit union memberships
and general powers
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Subdivisions 3 and 5 of section 450-a of the banking law,
2 as added by chapter 214 of the laws of 1999, are amended to read as
3 follows:
4 3. Notwithstanding any other provision of this article, a low income
5 credit union may issue shares, share drafts and share certificates to
6 nonmembers who or which may be natural persons, corporations, partner-
7 ships or other legal entities. A BRANCH OF A LOW INCOME CREDIT UNION
8 LOCATED IN A LOW INCOME AREA SHALL BE EXEMPT FROM TAXATION UNDER SECTION
9 FOUR HUNDRED EIGHTY-FIVE-F OF THE REAL PROPERTY TAX LAW.
10 5. As used in this section, the term "low income credit union" shall
11 mean a credit union in which a majority of [the members] A WELL-DEFINED
12 SEGMENT OF MEMBERS TO BE SERVED: (a) make less than eighty percent of
13 the average for all wage earners as established by the bureau of labor
14 statistics of the United States department of labor or have annual
15 household incomes that fall at or below eighty percent of the median
16 household income for the nation as established by the United States
17 census bureau; or (b) are residents of a public housing project who
18 qualify for such residency because of low income; or (c) qualify to
19 receive benefits from any program designed to assist the economically
20 disadvantaged. The banking board may promulgate regulations appropriate
21 to the formation and operation of low income credit unions.
22 S 2. Subdivision 2 of section 451 of the banking law, as amended by
23 chapter 660 of the laws of 2004, is amended to read as follows:
24 2. The qualifications for membership.
25 [(a) Membership shall be limited to:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10800-01-1
A. 8145 2
1 (1) persons having a common employer;
2 (2) persons and organizations who are members of the same trade,
3 industry, profession, club, union, society or other association;
4 (3) in the case of a credit union incorporated under this chapter as
5 of the effective date of this subdivision, and with the approval of the
6 superintendent, which approval shall not be given if it would be
7 destructive of competition within a municipality, more than one common
8 employer; provided, however, that an employer group with under three
9 thousand employees may be added upon receipt of a notice as provided in
10 subdivision two of section four hundred seventy-eight of this article;
11 (4) with the approval of the superintendent, and subject to the
12 provisions of paragraph (b) of this subdivision, more than one group
13 each of which has, within the group, a common bond of occupation,
14 including a common employer, or association; provided, however, that a
15 group of less than three thousand members, which is within reasonable
16 proximity to the credit union's service area or areas, may be added upon
17 receipt of a notice as provided in subdivision two of section four
18 hundred seventy-eight of this article; or
19 (5) persons and organizations within a well-defined local community,
20 neighborhood or rural district and who in the judgment of the super-
21 intendent have such a community of interest as will insure proper admin-
22 istration.
23 (b) In considering an application to add a group to a credit union
24 authorized under subparagraph four of paragraph (a) of this subdivision,
25 the superintendent shall not approve the addition unless the group is
26 within reasonable proximity to the credit union's service area or areas.
27 If the group has more than three thousand members, the superintendent
28 shall not approve such addition unless he or she determines that the
29 group could not feasibly or reasonably establish a new single common
30 bond credit union because:
31 (1) the group lacks sufficient volunteer and other resources to
32 support the efficient and effective operation of a credit union;
33 (2) the group does not meet the criteria which the superintendent has
34 determined to be important for the likelihood of success in establishing
35 and managing a new credit union, including demographic characteristics
36 such as geographical location of members, diversity of ages and income
37 levels, and other factors that may affect the financial viability and
38 stability of a credit union;
39 (3) the group would be unlikely to operate a safe and sound credit
40 union; or
41 (4) the group has been transferred from another credit union in
42 connection with a merger or consolidation recommended by a state or
43 federal regulator based on safety and soundness concerns or by the board
44 of the National Credit Union Administration in its capacity as conserva-
45 tor or liquidating agent.
46 (c) With the approval of the superintendent, a credit union may extend
47 membership to persons and organizations in an underserved local communi-
48 ty, neighborhood or rural district, where such area is determined by the
49 superintendent to be an "investment area" as defined in the federal
50 Community Development Banking and Financial Institutions Act of 1994 (12
51 U.S.C. 4703(16)) and any other requirements imposed by the superinten-
52 dent, including a requirement that the credit union establish and main-
53 tain an office or facility in such area.
54 (d) To the extent not expressly prohibited by the bylaws of the credit
55 union:
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1 (1) in each instance where a person is a member or is directly eligi-
2 ble for membership, members of his or her immediate family or household
3 shall be eligible for membership. For the purposes of this subparagraph,
4 "immediate family" means a person's spouse, and their lineal ancestors
5 and descendants, including persons so related by adoption, siblings,
6 stepparents, stepchildren, and stepsiblings; and "household" means
7 persons living in the same residence and maintaining a single economic
8 unit;
9 (2) any employee of the credit union shall be eligible to membership;
10 and
11 (3) any member who leaves the field of membership and who has not
12 withdrawn or been expelled may retain membership.
13 (e) To the extent not expressly prohibited by the bylaws of the credit
14 union, any incorporated or unincorporated organization composed princi-
15 pally of persons eligible to membership in the credit union and the
16 organization's employees shall be eligible to membership in the credit
17 union.
18 (f) Any person who is eligible for membership by reason of the fact
19 that he or she is an employee either of a common employer or of a credit
20 union shall not become ineligible, after the termination of such employ-
21 ment, as long as he or she receives a pension or annuity from, or under,
22 a plan or other arrangement established by such common employer or cred-
23 it union.
24 (g) The provisions of this subdivision shall not apply to a corporate
25 credit union.] QUALIFICATIONS FOR MEMBERSHIP SHALL BE PURSUANT TO
26 SECTION FOUR HUNDRED FIFTY-ONE-A OF THIS ARTICLE AND SHALL NOT APPLY TO
27 A CORPORATE CREDIT UNION.
28 S 3. The banking law is amended by adding a new section 451-a to read
29 as follows:
30 S 451-A. QUALIFICATIONS FOR MEMBERSHIP. 1. THE MEMBERSHIP OF A CREDIT
31 UNION SHALL BE DETERMINED BY THE BOARD OF DIRECTORS OF SUCH CREDIT UNION
32 AND SHALL CONSIST OF PERSONS WITHIN THE CREDIT UNION'S FIELD OF MEMBER-
33 SHIP WHO HAVE BEEN DULY ADMITTED MEMBERS.
34 2. A CREDIT UNION'S FIELD OF MEMBERSHIP MAY INCLUDE:
35 (A) PERSONS WITHIN ONE OR MORE GROUPS OF THE FOLLOWING, OR A COMBINA-
36 TION OF SUCH GROUPS:
37 (1) OCCUPATION, OR
38 (2) ASSOCIATION OR INTEREST, OR
39 (3) PERSONS WHO RESIDE, WORK, WORSHIP OR ATTEND SCHOOL WITHIN A
40 GEOGRAPHIC AREA, IDENTIFIABLE NEIGHBORHOOD, COMMUNITY OR RURAL DISTRICT;
41 AND
42 (B) BUSINESSES, ASSOCIATIONS OR ORGANIZATIONS LOCATED WITHIN A
43 GEOGRAPHIC AREA; AND
44 (C) FAMILY MEMBERS OF SUCH PERSONS DESCRIBED IN PARAGRAPH (A) OF THIS
45 SUBDIVISION. FOR THE PURPOSES OF THIS PARAGRAPH, "FAMILY MEMBER" MEANS A
46 PERSON RELATED BY BLOOD, MARRIAGE OR LIVING IN THE SAME HOUSEHOLD WITH A
47 PERSON WITHIN THE FIELD OF MEMBERSHIP AND THEIR LINEAL ANCESTORS AND
48 DESCENDANTS INCLUDING PERSONS SO RELATED BY ADOPTION, SIBLINGS, STEPPAR-
49 ENTS, STEPCHILDREN AND STEPSIBLINGS; AND "HOUSEHOLD" MEANS PERSONS
50 LIVING IN THE SAME RESIDENCE AND MAINTAINING A SINGLE ECONOMIC UNIT; AND
51 (D) ANY EMPLOYEE OF THE CREDIT UNION; AND
52 (E) ANY MEMBER WHO LEAVES THE FIELD OF MEMBERSHIP AND WHO HAS NOT
53 WITHDRAWN OR BEEN EXPELLED MAY RETAIN MEMBERSHIP; AND
54 (F) ANY INCORPORATED OR UNINCORPORATED ORGANIZATION COMPOSED PRINCI-
55 PALLY OF PERSONS ELIGIBLE TO MEMBERSHIP IN THE CREDIT UNION AND THAT
56 ORGANIZATION'S EMPLOYEES.
A. 8145 4
1 3. ANY PERSON WHO IS ELIGIBLE FOR MEMBERSHIP BY REASON OF THE FACT
2 THAT HE OR SHE IS AN EMPLOYEE OF A COMMON EMPLOYER OR OF A CREDIT UNION
3 SHALL NOT BECOME INELIGIBLE, AFTER THE TERMINATION OF SUCH EMPLOYMENT,
4 AS LONG AS HE OR SHE RECEIVES A PENSION OR ANNUITY FROM, OR UNDER, A
5 PLAN OR OTHER ARRANGEMENT ESTABLISHED BY SUCH COMMON EMPLOYER OR CREDIT
6 UNION.
7 4. A CREDIT UNION MAY EXTEND MEMBERSHIP TO PERSONS AND ORGANIZATIONS
8 IN AN UNDERSERVED LOCAL COMMUNITY, NEIGHBORHOOD OR RURAL DISTRICT WHERE
9 SUCH AREA IS CONSIDERED AN "INVESTMENT AREA" AS DEFINED IN THE FEDERAL
10 COMMUNITY DEVELOPMENT BANKING AND FINANCIAL INSTITUTIONS ACT OF 1994 (12
11 U.S.C. 4703(16)).
12 S 4. Subparagraph (i) of paragraph (c) of subdivision 6 of section 454
13 of the banking law, as added by chapter 660 of the laws of 2004, is
14 amended to read as follows:
15 (i) [No credit union may make any member business loan that would
16 result in a total amount of such loans outstanding at that credit union
17 at any one time equal to more than the lesser of 1.75 times the actual
18 net worth of the credit union, or 1.75 times the minimum net worth
19 required under 12 U.S.C. 1790d(c)(1)(A) for a credit union to be well
20 capitalized.] NO CREDIT UNION SHALL MAKE ANY MEMBER BUSINESS LOAN THAT
21 WOULD RESULT IN A TOTAL AMOUNT OF SUCH LOANS OUTSTANDING AT THE CREDIT
22 UNION AT ANY ONE TIME EQUAL TO MORE THAN THE GREATER OF TWENTY-FIVE
23 PERCENT OF THE TOTAL ASSETS OF THE CREDIT UNION, OR THE LIMIT ESTAB-
24 LISHED FOR FEDERAL CREDIT UNIONS.
25 S 5. Subparagraph (i) of paragraph (a) of subdivision 18 of section
26 454 of the banking law, as amended by chapter 679 of the laws of 2003,
27 is amended to read as follows:
28 (i) Those securities authorized as permissible investments for savings
29 banks by subdivisions one, two, three, four, SIX, SUBPARAGRAPH FIVE OF
30 PARAGRAPH (A) OF SUBDIVISION NINE, twelve, [paragraph] PARAGRAPHS (a)
31 AND (B) of subdivision twelve-a, [and] subdivisions fifteen, seventeen,
32 PARAGRAPH (A) OF SUBDIVISION TWENTY, SUBPARAGRAPHS ONE AND ONE-A OF
33 PARAGRAPH (A) OF SUBDIVISION TWENTY-ONE, AND SUBDIVISIONS TWENTY-FOUR-D,
34 twenty-seven [and], TWENTY-EIGHT, twenty-eight-a, TWENTY-NINE AND THIRTY
35 of section two hundred thirty-five of this chapter.
36 S 6. Subdivision 18 of section 454 of the banking law, as amended by
37 chapter 679 of the laws of 2003, is amended by adding a new paragraph
38 (d) to read as follows:
39 (D) ALL INVESTMENT ACTIVITIES AND INVESTMENTS AUTHORIZED FOR FEDERAL
40 CREDIT UNIONS UNDER 12 CFR PART 703.13 AND 703.14.
41 S 7. Subdivision 21 of section 454 of the banking law, as amended by
42 chapter 679 of the laws of 2003, is amended to read as follows:
43 21. To purchase, hold, lease and convey a plot whereon there is or may
44 be erected a building suitable for the transaction of its business, from
45 portions of which not required for its own use a revenue may be derived,
46 and a plot whereon parking accommodations are or are to be provided,
47 with or without charge, primarily for its members or employees or both;
48 provided that the net aggregate of all investments of any credit union
49 in such plots and building shall be limited to [six] FORTY per centum of
50 the capital and retained earnings of such credit union, except with the
51 approval of the superintendent.
52 S 8. Subdivision 2 of section 461 of the banking law, as added by
53 chapter 608 of the laws of 1996, is amended to read as follows:
54 2. Subject to such regulations as the superintendent may adopt, any
55 credit union, may open and maintain within or without the state, in any
56 locality in which [a substantial portion of] its actual potential
A. 8145 5
1 membership is employed, ATTENDING SCHOOL or residing, one or more
2 stations for the conduct of its business [provided that before any such
3 station or stations shall be opened or maintained or removed to a new
4 location:
5 (a) Its board of directors shall submit to the superintendent a writ-
6 ten application setting forth the reasons therefor and the proposed
7 location of such station or stations.
8 (b) The superintendent shall have given his written approval thereto].
9 S 9. Subdivision 1 of section 454 of the banking law, as amended by
10 chapter 679 of the laws of 2003, is amended to read as follows:
11 1. To issue and receive payments on, shares, share drafts, and share
12 certificates, subject to such terms, rates, and conditions as are estab-
13 lished by its board of directors, from:
14 (A) its members;
15 (B) AN OFFICER, EMPLOYEE OR AGENT OF THOSE NONMEMBER UNITS OF THE
16 FEDERAL, STATE, INDIAN TRIBAL OR LOCAL GOVERNMENTS AND POLITICAL SUBDI-
17 VISIONS; and
18 (C) from other credit unions, both state and federally chartered.
19 A member may designate any person or persons to own shares or share
20 certificates with him or her in joint tenancy with the right of survi-
21 vorship, but no joint tenant shall be permitted to vote, obtain loans,
22 or hold office, unless he or she is within the field of membership and
23 is a qualified member.
24 S 10. Section 454 of the banking law is amended by adding two new
25 subdivisions 37 and 38 to read as follows:
26 37. TO EXERCISE INCIDENTAL POWERS APPROVED BY THE NATIONAL CREDIT
27 UNION ADMINISTRATION AS SET FORTH IN 12 C.F.R. 721.
28 38. TO RECEIVE SUPPLEMENTAL CAPITAL FROM BOTH NATURAL AND NON-NATURAL
29 PERSON NON-MEMBERS. THE OFFER AND SALE OF SUPPLEMENTAL CAPITAL SHALL BE
30 SUBJECT TO REGULATIONS PROMULGATED BY THE SUPERINTENDENT THAT SHALL
31 ADDRESS THE SAFETY AND SOUNDNESS OF THE OFFER OR SALE OF SUCH SUPPLE-
32 MENTAL CAPITAL, INCLUDING THE SUPPLEMENTAL CAPITAL'S MATURITY, TERM OF
33 SALE, TERMS OF CAPITAL, TOTAL AMOUNT OF SUPPLEMENTAL CAPITAL THAT MAY BE
34 OUTSTANDING AT ONE TIME, REDEMPTION, ELIGIBILITY OF THE INVESTORS. IN
35 ADDITION, SUPPLEMENTAL CAPITAL SHALL BE SUBJECT TO ALL OF THE FOLLOWING:
36 (I) THE SUPPLEMENTAL CAPITAL SHALL BE ESTABLISHED AS AN UNINSURED
37 SUPPLEMENTAL CAPITAL OR OTHER FORM OF NON-SHARE ACCOUNT.
38 (II) THE SUPPLEMENTAL CAPITAL MAY NOT BE INSURED BY THE NATIONAL CRED-
39 IT UNION SHARE INSURANCE FUND (NCUSIF) OR ANY OTHER GOVERNMENTAL OR
40 PRIVATE ENTITY.
41 (III) THE SUPPLEMENTAL CAPITAL HOLDER'S CLAIM AGAINST THE CREDIT UNION
42 SHALL BE SUBORDINATE TO ALL OTHER CLAIMS INCLUDING THOSE OF SHAREHOLD-
43 ER'S CREDITORS, AND THE NCUSIF, OR AN APPROVED INSURER.
44 (IV) THE SUPPLEMENTAL CAPITAL MAY NOT BE PLEDGED OR PROVIDED BY THE
45 ACCOUNT HOLDER AS A SECURITY ON A LOAN OR OTHER OBLIGATION WITH THE
46 CREDIT UNION OR ANY OTHER PARTY.
47 FOR PURPOSES OF THIS SECTION, SUPPLEMENTAL CAPITAL SHALL MEAN FORMS OF
48 CAPITAL THAT ARE SUBORDINATE TO SHARES, OTHER LIABILITIES AND SHARE
49 INSURANCE.
50 S 11. Section 479 of the banking law, as added by chapter 608 of the
51 laws of 1996, is amended to read as follows:
52 S 479. Credit union not liable for taxation. Any credit union subject
53 to the provisions of this article shall be deemed an institution for
54 savings within the meaning of the law which exempts such institutions
55 from taxation. No law which taxes corporations in any form, or the
56 shares thereof or the accumulations therein, OR THEIR PROPERTY, THEIR
A. 8145 6
1 FRANCHISES, CAPITAL, RESERVES, SURPLUSES, AND OTHER FUNDS, OR THEIR
2 INCOME, shall apply to corporations doing business in accordance with
3 the provisions of this article, unless such corporations are specif-
4 ically named in said law, EXCEPT THAT ANY REAL AND TANGIBLE PERSONAL
5 PROPERTY OF SUCH CORPORATION SHALL BE SUBJECT TO TAXATION TO THE SAME
6 EXTENT AS OTHER SIMILAR PROPERTY IS TAXED.
7 S 12. This act shall take effect immediately.
