Bill Text: NY S06079 | 2019-2020 | 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: Slight Partisan Bill (Democrat 3-1)

Status: (Introduced) 2019-06-13 - PRINT NUMBER 6079A [S06079 Detail]

Download: New_York-2019-S06079-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         6079--A

                               2019-2020 Regular Sessions

                    IN SENATE

                                      May 16, 2019
                                       ___________

        Introduced  by  Sens.  SANDERS,  ROBACH,  MAY,  MAYER  -- read twice and
          ordered printed, and when printed to be committed to the Committee  on
          Local  Government  --  committee discharged and said bill committed 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

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02132-05-9

        S. 6079--A                          2

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

        S. 6079--A                          3

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

        S. 6079--A                          4

     1    §  9. 1. The department of financial services is hereby authorized and
     2  directed to study  and  issue  a  public  report  with  recommendations,
     3  concerning  the impact of allowing credit unions, savings banks, savings
     4  and loan associations or federal savings associations  to  accept  local
     5  government  public  deposits. This report shall be prepared in consulta-
     6  tion with  stakeholders,  including  local  governments,  banks,  credit
     7  unions, savings banks, savings and loan associations and federal savings
     8  associations.
     9    2.  On  or  before  January  1,  2025, the superintendent of financial
    10  services shall submit to the governor, the temporary  president  of  the
    11  senate,  the  speaker  of the assembly, the chair of the senate standing
    12  committee on banks, and the chair of the assembly standing committee  on
    13  banks,  a  written  report detailing the findings and recommendations on
    14  the department's study performed in accordance with subdivision  one  of
    15  this section. The superintendent shall use reasonable efforts to identi-
    16  fy  any  impacts  by  expanding  the  financial institutions eligible to
    17  accept municipal deposits and shall include the following information in
    18  the report:
    19    (a) An analysis of deposits held in banks including the  size  of  the
    20  bank's  assets,  location of banks, type of bank charter, changes in the
    21  amount of commercial bank held deposits from the effective date  of  the
    22  chapter  of  the laws of 2019 that added this section and overall impact
    23  on banking industry, in particular small community banks.
    24    (b) The growth of municipal deposits held in  credit  unions,  savings
    25  banks,  savings  and  loan  associations or federal savings associations
    26  after the effective date of the chapter of the laws of 2019  that  added
    27  this section.
    28    §  10. Section 86 of the banking law, as amended by chapter 274 of the
    29  laws of 2007, is amended to read as follows:
    30    § 86. Eligibility. 1. For the  purposes  of  this  article,  the  term
    31  "community bank institution" shall mean any state or federally chartered
    32  banking  institution  and shall include any bank, trust company, savings
    33  bank or savings and loan association with less than ten billion  dollars
    34  in  assets  that  is  headquartered  in this state and whose predominant
    35  retail and commercial banking operations serve residents and  businesses
    36  of  this  state,  as determined by the superintendent in his or her sole
    37  discretion and pursuant to such rules and regulations as the superinten-
    38  dent deems necessary to implement and administer these provisions.
    39    2. To be eligible to receive deposits, or to renew  existing  deposits
    40  under  this program[, a bank, trust company, savings bank or savings and
    41  loan association: (a) must be chartered under  the  provisions  of  this
    42  chapter and (b)] a community bank institution:
    43    (a)  must  have  a  current  CRA rating of satisfactory or better. The
    44  superintendent shall, if requested  by  the  state  comptroller  or  the
    45  commissioner of taxation and finance, confirm whether a particular bank-
    46  ing institution meets the criteria specified in this section; and
    47    (b)  meet  any  additional criteria established by the comptroller and
    48  the commissioner of taxation and finance to  determine  eligibility  for
    49  participation in the program. Such criteria may include an institution's
    50  loan  to  deposit  ratio,  its record of small business lending, and the
    51  impact such deposits would have on an area's economic activity.
    52    [2. A federal bank, trust company, savings bank or  savings  and  loan
    53  association may also be eligible to receive deposits, or to renew exist-
    54  ing deposits, under this program if: (a) its principal office is located
    55  in  this  state;  (b)  it  has  a  current CRA rating of satisfactory or
    56  better; and (c) it meets any  additional  criteria  established  by  the

        S. 6079--A                          5

     1  comptroller  and  the  commissioner of taxation and finance to determine
     2  eligibility for participation in the program. Such criteria may  include
     3  an  institution's  loan  to  deposit ratio, its record of small business
     4  lending,  and  the impact such deposits would have on an area's economic
     5  activity.]
     6    § 11. Section 87 of the banking law, as amended by chapter 274 of  the
     7  laws  of  2007,  subdivision  2 as amended by chapter 495 of the laws of
     8  2013, is amended to read as follows:
     9    § 87. Deposits. 1.  Notwithstanding  any  provisions  of  law  to  the
    10  contrary,  the  state  comptroller  and the commissioner of taxation and
    11  finance shall, for the purposes of administering  moneys  in  accordance
    12  with  the  provisions of sections ninety-eight-a and one hundred five of
    13  the state finance law, give consideration to depositing funds into those
    14  community banking institutions which  are  deemed  eligible  to  receive
    15  deposits pursuant to section eighty-six of this article.
    16    2.  The  maximum  amount  of funds which the state comptroller and the
    17  commissioner of taxation and finance  may  deposit  under  this  program
    18  shall  not exceed [two] three hundred [fifty] million dollars each. [The
    19  maximum amount of funds on deposit at a  community  banking  institution
    20  shall not exceed twenty million dollars.]
    21    3.  Notwithstanding any provision of law to the contrary, any deposits
    22  made pursuant to this article shall be made at rates, and for such peri-
    23  ods of time, as may be agreed to by the state comptroller or the commis-
    24  sioner of taxation and finance and the eligible community banking insti-
    25  tution.
    26    4. Any deposits made pursuant to this article may  be  secured  by  an
    27  irrevocable letter of credit issued by a federal home loan bank.
    28    5.  The comptroller and the commissioner of taxation and finance shall
    29  annually submit a joint report to the governor, the temporary  president
    30  of  the  senate,  the  speaker  of the assembly, the chair of the senate
    31  finance committee, the chair of the assembly ways and  means  committee,
    32  the  chair  of  the senate standing committee on banks, and the chair of
    33  the assembly standing committee on banks on the efficacy of the communi-
    34  ty bank deposit program, including information on the number  of  quali-
    35  fied  community  banking  institutions,  the number of community banking
    36  institutions which have received deposits, the size of each  participat-
    37  ing  community  bank,  the  number  and  amount of such deposits and the
    38  percentage of total state funds deposited  in  such  institutions  under
    39  this program.
    40    § 12. No municipal deposits held in credit unions by local governments
    41  on  December 31, 2025 shall be required to be withdrawn upon the expira-
    42  tion of this act.
    43    § 13. This act shall take effect on the ninetieth day after  it  shall
    44  have  become  a  law;  provided that sections two, three, four, five and
    45  nine of this act shall expire and be deemed repealed December 31, 2025.
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