Bill Text: NY A08289 | 2021-2022 | General Assembly | Introduced


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 11-1)

Status: (Introduced - Dead) 2022-01-05 - referred to banks [A08289 Detail]

Download: New_York-2021-A08289-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          8289

                               2021-2022 Regular Sessions

                   IN ASSEMBLY

                                     October 6, 2021
                                       ___________

        Introduced  by  M. of A. FAHY -- read once and referred to the Committee
          on Banks

        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-
    18  ized to do business in New York which has  its  principal  office  in  a
    19  location  described  in  paragraph  (a)  of  subdivision thirty-eight of

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05504-01-1

        A. 8289                             2

     1  section four hundred fifty-four of the banking law, or a  branch  office
     2  in  a location described in paragraph (b) of subdivision thirty-eight of
     3  section four hundred fifty-four of the banking law,  may  accept  public
     4  deposits  by  a  local  government  subject to the limitations set forth
     5  herein. For the calendar year  beginning  January  first,  two  thousand
     6  twenty-two,  the governing board of a local government may designate one
     7  or more credit unions, for the deposit of public funds in an amount  not
     8  to  exceed  five  hundred thousand dollars in each institution.  For the
     9  calendar year beginning January first, two  thousand  twenty-three,  the
    10  governing  board  of a local government may designate one or more credit
    11  unions for the deposit of public funds in an amount not  to  exceed  one
    12  million  dollars  in  each  institution. For the calendar year beginning
    13  January first, two thousand twenty-four, the governing board of a  local
    14  government  may  designate  one or more credit unions for the deposit of
    15  public funds in an amount not to exceed  two  million  dollars  in  each
    16  institution.    For the calendar year beginning January first, two thou-
    17  sand twenty-five, the governing board of a local government  may  desig-
    18  nate  one  or  more  credit unions for the deposit of public funds in an
    19  amount not to exceed three million dollars in each institution. For  the
    20  calendar  year  beginning  January  first,  two thousand twenty-six, the
    21  governing board of a local government may designate one or  more  credit
    22  unions  for  the deposit of public funds in an amount not to exceed four
    23  million dollars in each institution. For  the  calendar  year  beginning
    24  January first, two thousand twenty-seven, the governing board of a local
    25  government  may  designate  one or more credit unions for the deposit of
    26  public funds in an amount not to exceed five  million  dollars  in  each
    27  institution.  For  the  purposes  of this section, a deposit limit shall
    28  mean the maximum amount of all funds of a local government in an  insti-
    29  tution based on a daily account balance excluding any accrued interest.
    30    §  3. Section 454 of the banking law is amended by adding a new subdi-
    31  vision 38 to read as follows:
    32    38. (a) To accept deposits  for  credit  to  a  local  government,  as
    33  defined  in paragraph a of subdivision one of section ten of the general
    34  municipal law, at its principal office where such credit union maintains
    35  its principal office within the jurisdiction of such local government.
    36    (b) To accept deposits for credit to a local government, as defined in
    37  paragraph a of subdivision one of section ten of the  general  municipal
    38  law,  at  its  branch  office where such credit union maintains a branch
    39  office within the jurisdiction of such local government.
    40    § 4. The banking law is amended by adding a new section 454-a to  read
    41  as follows:
    42    §  454-a.  Deposits  of  public money with credit unions; security.  A
    43  credit union may accept deposits of public money subject to the  limita-
    44  tions  provided  in  subdivision  thirty-eight  of  section four hundred
    45  fifty-four of this article. Such credit union  shall  pledge  assets  or
    46  furnish other security satisfactory in form and amount to the depositor,
    47  for  the  repayment  of  monies held in the name of such depositor, when
    48  required to be secured by applicable law, decree or regulation.
    49    § 5. The banking law is amended by adding a new section 454-b to  read
    50  as follows:
    51    §  454-b. Community investment by credit union; condition of accepting
    52  municipal deposits.  1. If the average daily balance  of  the  municipal
    53  funds on deposit at the credit union for the preceding year is in excess
    54  of  three  hundred thousand dollars, the chief financial officer, or the
    55  senior official in the credit union with responsibility  for  performing
    56  the functions of a chief financial officer of a credit union that choos-

        A. 8289                             3

     1  es  to  accept municipal deposits pursuant to section ten of the general
     2  municipal law, shall, consistent with safety and soundness, transmit  to
     3  the  department  by  December  thirty-first each year, a written certif-
     4  ication,  in  a  form  specified by the superintendent and posted on the
     5  department's website, that the credit union has invested into the commu-
     6  nity, pursuant to this  section,  a  sum  equal  to  the  average  daily
     7  balance,  multiplied  by  a  factor  of  .0035, provided, however, in no
     8  event, shall a credit union be required to contribute a sum in excess of
     9  one hundred thousand dollars in any one year.
    10    2. The community investment  described  in  subdivision  one  of  this
    11  section  shall  be  used  to  support  any of the following purposes, as
    12  determined by the credit union, in any community where such credit union
    13  has authority to provide  services,  provided  the  credit  union  shall
    14  prioritize low-income communities when choosing where to invest:
    15    (a) minority and women-owned business enterprises in the community; or
    16    (b) affordable housing (including multifamily rental housing) for low-
    17  and moderate-income individuals in the community; or
    18    (c)  community  services targeted to low- and moderate-income individ-
    19  uals in the community; or
    20    (d) activities that revitalize or stabilize  the  community  including
    21  low- or moderate-income geographies, or designated disaster areas; or
    22    (e) financial literacy.
    23    3.  For  purposes  of  the  community investment pursuant to this this
    24  section, field of membership restrictions shall not apply.
    25    § 6. Subdivision 2 of section 237 of the banking law,  as  amended  by
    26  chapter 360 of the laws of 1984, is amended to read as follows:
    27    2. [No savings bank shall accept any deposit for credit to any munici-
    28  pal  corporation.]  (a)  A  savings  bank  which maintains its principal
    29  office within the jurisdiction of a  local  government,  as  defined  in
    30  paragraph  a  of subdivision one of section ten of the general municipal
    31  law, may accept deposits at such principal office  for  credit  to  such
    32  local government.
    33    (b)  A  savings bank which maintains a branch office within the juris-
    34  diction of a local government, as defined in paragraph a of  subdivision
    35  one  of section ten of the general municipal law, may accept deposits at
    36  such branch office for credit to such local government.
    37    § 7. Section 234 of the banking law is amended by adding a new  subdi-
    38  vision 27 to read as follows:
    39    27. Pursuant to subdivision two of section two hundred thirty-seven of
    40  this article, to pledge assets or furnish other security satisfactory in
    41  form  and  amount  to the depositor, for the repayment of monies held in
    42  the name of such depositor, when required to be  secured  by  applicable
    43  law,  decree  or  regulation  and  to  exercise  the powers contained in
    44  section ninety-six-b of this chapter.
    45    § 8. Section 383 of the banking law is amended by adding a new  subdi-
    46  vision 18 to read as follows:
    47    18. Pursuant to subdivision two of section two hundred thirty-seven of
    48  this chapter, to pledge assets or furnish other security satisfactory in
    49  form  and  amount  to the depositor, for the repayment of monies held in
    50  the name of such depositor, when required to be  secured  by  applicable
    51  law,  decree  or  regulation  and  to  exercise  the powers contained in
    52  section ninety-six-b of this chapter.
    53    § 9. 1. The department of financial services is hereby authorized  and
    54  directed  to  study  and  issue  a  public  report with recommendations,
    55  concerning the impact of allowing credit unions, savings banks,  savings
    56  and  loan  associations  or federal savings associations to accept local

        A. 8289                             4

     1  government public deposits. This report shall be prepared  in  consulta-
     2  tion  with  stakeholders,  including  local  governments,  banks, credit
     3  unions, savings banks, savings and loan associations and federal savings
     4  associations.
     5    2.  On  or  before  January  1,  2027, the superintendent of financial
     6  services shall submit to the governor, the temporary  president  of  the
     7  senate,  the  speaker  of the assembly, the chair of the senate standing
     8  committee on banks, and the chair of the assembly standing committee  on
     9  banks,  a  written  report detailing the findings and recommendations on
    10  the department's study performed in accordance with subdivision  one  of
    11  this section. The superintendent shall use reasonable efforts to identi-
    12  fy  any  impacts  by  expanding  the  financial institutions eligible to
    13  accept municipal deposits and shall include the following information in
    14  the report:
    15    (a) An analysis of deposits held in banks including the  size  of  the
    16  bank's  assets,  location of banks, type of bank charter, changes in the
    17  amount of commercial bank held deposits from the effective date of  this
    18  act and overall impact on banking industry, in particular small communi-
    19  ty banks.
    20    (b)  The  growth  of municipal deposits held in credit unions, savings
    21  banks, savings and loan associations  or  federal  savings  associations
    22  after the effective date of this act.
    23    §  10. Section 86 of the banking law, as amended by chapter 274 of the
    24  laws of 2007, is amended to read as follows:
    25    § 86. Eligibility. 1. For the  purposes  of  this  article,  the  term
    26  "community bank institution" shall mean any state or federally chartered
    27  banking  institution  and shall include any bank, trust company, savings
    28  bank or savings and loan association with less than ten billion  dollars
    29  in  assets  that  is  headquartered  in this state and whose predominant
    30  retail and commercial banking operations serve residents and  businesses
    31  of  this  state,  as determined by the superintendent in his or her sole
    32  discretion and pursuant to such rules and regulations as the superinten-
    33  dent deems necessary to implement and administer these provisions.
    34    2. To be eligible to receive deposits, or to renew  existing  deposits
    35  under  this program[, a bank, trust company, savings bank or savings and
    36  loan association: (a) must be chartered under  the  provisions  of  this
    37  chapter and (b)] a community bank institution:
    38    (a)  must  have  a  current  CRA rating of satisfactory or better. The
    39  superintendent shall, if requested  by  the  state  comptroller  or  the
    40  commissioner of taxation and finance, confirm whether a particular bank-
    41  ing institution meets the criteria specified in this section; and
    42    (b)  meet  any  additional criteria established by the comptroller and
    43  the commissioner of taxation and finance to  determine  eligibility  for
    44  participation in the program. Such criteria may include an institution's
    45  loan  to  deposit  ratio,  its record of small business lending, and the
    46  impact such deposits would have on an area's economic activity.
    47    [2. A federal bank, trust company, savings bank or  savings  and  loan
    48  association may also be eligible to receive deposits, or to renew exist-
    49  ing deposits, under this program if: (a) its principal office is located
    50  in  this  state;  (b)  it  has  a  current CRA rating of satisfactory or
    51  better; and (c) it meets any  additional  criteria  established  by  the
    52  comptroller  and  the  commissioner of taxation and finance to determine
    53  eligibility for participation in the program. Such criteria may  include
    54  an  institution's  loan  to  deposit ratio, its record of small business
    55  lending, and the impact such deposits would have on an  area's  economic
    56  activity.]

        A. 8289                             5

     1    §  11. Section 87 of the banking law, as amended by chapter 274 of the
     2  laws of 2007, subdivision 2 as amended by chapter 495  of  the  laws  of
     3  2013, is amended to read as follows:
     4    §  87.  Deposits.  1.  Notwithstanding  any  provisions  of law to the
     5  contrary, the state comptroller and the  commissioner  of  taxation  and
     6  finance  shall,  for  the purposes of administering moneys in accordance
     7  with the provisions of sections ninety-eight-a and one hundred  five  of
     8  the state finance law, give consideration to depositing funds into those
     9  community  banking  institutions  which  are  deemed eligible to receive
    10  deposits pursuant to section eighty-six of this article.
    11    2. The maximum amount of funds which the  state  comptroller  and  the
    12  commissioner  of  taxation  and  finance  may deposit under this program
    13  shall not exceed [two] three hundred [fifty] million dollars each.  [The
    14  maximum  amount  of  funds on deposit at a community banking institution
    15  shall not exceed twenty million dollars.]
    16    3. Notwithstanding any provision of law to the contrary, any  deposits
    17  made pursuant to this article shall be made at rates, and for such peri-
    18  ods of time, as may be agreed to by the state comptroller or the commis-
    19  sioner of taxation and finance and the eligible community banking insti-
    20  tution.
    21    4.  Any  deposits  made  pursuant to this article may be secured by an
    22  irrevocable letter of credit issued by a federal home loan bank.
    23    5. The comptroller and the commissioner of taxation and finance  shall
    24  annually  submit a joint report to the governor, the temporary president
    25  of the senate, the speaker of the assembly,  the  chair  of  the  senate
    26  finance  committee,  the chair of the assembly ways and means committee,
    27  the chair of the senate standing committee on banks, and  the  chair  of
    28  the assembly standing committee on banks on the efficacy of the communi-
    29  ty  bank  deposit program, including information on the number of quali-
    30  fied community banking institutions, the  number  of  community  banking
    31  institutions  which have received deposits, the size of each participat-
    32  ing community bank, the number and  amount  of  such  deposits  and  the
    33  percentage  of  total  state  funds deposited in such institutions under
    34  this program.
    35    § 12. No municipal deposits held in credit unions by local governments
    36  on December 31, 2027 shall be required to be withdrawn upon the  expira-
    37  tion of this act.
    38    §  13.  This act shall take effect on the ninetieth day after it shall
    39  have become a law; provided that sections two,  three,  four,  five  and
    40  nine of this act shall expire and be deemed repealed December 31, 2027.
feedback