senate Bill S7415

Allows credit unions, savings banks, savings and loan associations and federal savings associations to accept and secure deposits from municipal corporations

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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  • 14 / May / 2014
    • REFERRED TO LOCAL GOVERNMENT

Summary

Allows credit unions, savings banks, savings and loan associations and federal savings associations to accept and secure deposits from municipal corporations.

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Bill Details

See Assembly Version of this Bill:
A930
Versions:
S7415
Legislative Cycle:
2013-2014
Current Committee:
Senate Local Government
Law Section:
General Municipal Law
Laws Affected:
Amd §§10 & 11, Gen Muni L; amd §§105 & 106, St Fin L
Versions Introduced in 2011-2012 Legislative Cycle:
A7790, A7790

Sponsor Memo

BILL NUMBER:S7415

TITLE OF BILL: An act to amend the general municipal law and the state
finance 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

SUMMARY OF PROVISIONS: This bill would amend Sections 10 and 11 of the
General Municipal Law to authorize deposits of municipal funds in credit
unions, savings banks and savings and loan associations. Deposits would
only be authorized in any particular bank, credit union or savings and
loans associations if such bank, credit union or savings and loans asso-
ciation pays the mortgage recording taxes required by Article 11 of the
Tax Law. Public funds deposited into a savings bank, federal savings
bank, credit union, federal credit union, savings and loan association,
or federal savings and loan association would be limited to one million
dollars per depositary.

REASONS FOR SUPPORT: This legislation advances New York City's long-
standing goals of ensuring a fair and vibrant marketplace for consumers
and businesses, through licensing, public education, and the enforcement
of the City's consumer protection laws. The New York City Department of
Consumer Affairs (DCA) Office of Financial Empowerment (OFE) was
launched by the Center for Economic Opportunity in December 2007, as the
first local government initiative in the nation aimed expressly at
educating, empowering, and protecting those with low incomes, so they
can build assets and make the most of their financial resources. One of
OFE's primary goals is to ensure that individuals with low incomes have
access to affordable, appropriate financial products offered by main-
stream financial institutions, rather than having to rely on costly
fringe services that erode their limited resources.

The efforts of DCA's OFE to link low income families to mainstream
financial institutions through safe and affordable products and services
depend upon a broad array of financial institution partners, including
community development credit unions and banks. OFE's most innovative
pilot programs to reach underbanked populations and help build savings -
such as the "SaveNYC" and "Opportunity NYC" accounts - have relied upon
the flexibility and creativity of credit unions and savings banks. Cred-
it unions and savings banks often have branches located in the low
income communities OFE targets, and offer basic transactional financial
products that are more transparent and lower cost for low income house-
holds than products offered by commercial banks. OFE's ability to
increase the scale of existing pilot new programs and pilot new innova-
tive banking products and services depends on the continued partnership
of these types of institutions. Municipal deposits could allow credit
unions and savings banks to increase their deposit base, and greatly
scale up the offering of affordable products to serve New Yorkers with
low incomes throughout New York City and State.

This legislation would allow DCA's OFE to expand its efforts to link
families with low incomes to safe, affordable products and services
offered by mainstream financial institutions.

Accordingly, the Mayor urges the earliest possible favorable consider-
ation of this proposal by the Legislature.

PRIOR LEGISLATIVE HISTORY: A7790 of the 2011-2012 legislative session.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7415

                            I N  S E N A T E

                              May 14, 2014
                               ___________

Introduced  by  Sen. SANDERS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Local Government

AN ACT to amend the general municipal law and the state finance 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

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph c of subdivision 1 of section 10 of  the  general
municipal law, as amended by chapter 623 of the laws of 1998, is amended
to read as follows:
  c.  "Public  deposits"  shall mean deposits of public funds in a bank,
SAVINGS BANK, SAVINGS AND  LOAN  ASSOCIATION,  CREDIT  UNION,  or  trust
company  which  are  available  for  all uses generally permitted by the
bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, or trust
company to the depositing local  government  for  actually  and  finally
collected funds under the bank's, SAVINGS BANK'S, SAVINGS AND LOAN ASSO-
CIATION'S, CREDIT UNION'S, or trust company's account agreement or poli-
cies.
  S  2.  Paragraphs  f,  g  and  h of subdivision 1 of section 10 of the
general municipal law are relettered paragraphs g, h and i and three new
paragraphs f, j and k are added to read as follows:
  F. "CREDIT UNION" SHALL MEAN A STATE-CHARTERED CREDIT UNION AS DEFINED
BY  SUBDIVISION  NINE  OF  SECTION  TWO  OF  THE  BANKING   LAW   OR   A
FEDERALLY-CHARTERED  CREDIT UNION AS DEFINED BY THE FEDERAL CREDIT UNION
ACT, LOCATED AND AUTHORIZED TO DO BUSINESS IN NEW YORK.
  J. "SAVINGS BANK" SHALL MEAN A SAVINGS BANK AS DEFINED BY  SUBDIVISION
FOUR OF SECTION TWO OF THE BANKING LAW OR ANY FEDERAL SAVINGS BANK.
  K.  "SAVINGS AND LOAN ASSOCIATION" SHALL MEAN A SAVINGS AND LOAN ASSO-
CIATION AS DEFINED BY SUBDIVISION EIGHT OF SECTION TWO  OF  THE  BANKING
LAW OR ANY FEDERAL SAVINGS AND LOAN ASSOCIATION.
  S  3.  Subdivisions  2, 3 and 4 of section 10 of the general municipal
law, as amended by chapter 623 of the  laws  of  1998,  paragraph  a  of
subdivision  2 as amended by chapter 128 of the laws of 2012, paragraphs

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04413-01-3

S. 7415                             2

a and b of subdivision 3 as amended by chapter 545 of the laws of  2005,
paragraph  c  of  subdivision 3 as amended by chapter 615 of the laws of
2002, and paragraph c of subdivision 2 and paragraph (e) of  subdivision
4  as further amended by section 104 of part A of chapter 62 of the laws
of 2011, are amended to read as follows:
  2. a. (i) The governing board of every local government  shall  desig-
nate  one  or  more banks, SAVINGS BANKS, SAVINGS AND LOAN ASSOCIATIONS,
CREDIT UNIONS or trust companies for the deposit of  public  funds,  the
disposition  of  which is not otherwise provided for by law, received by
the chief fiscal officer or any other officer authorized by law to  make
deposits. Such designation shall be by resolution of the governing board
or,  in  the  case  of  a  city, such other body as may be authorized or
required by law to designate depositaries. Such resolution shall specify
the maximum amount which may be kept on deposit at any time in each such
bank, SAVINGS BANKS, SAVINGS AND LOAN  ASSOCIATIONS,  CREDIT  UNIONS  or
trust  company. Such designations and amounts may be changed at any time
by further resolution.  THE GOVERNING BOARD OF  EVERY  LOCAL  GOVERNMENT
SHALL FORWARD A COPY OF SUCH RESOLUTION TO THE OFFICE OF THE STATE COMP-
TROLLER  WHO  SHALL RETAIN SUCH COPY UNTIL SUCH RESOLUTION IS AMENDED OR
DISSOLVED. A COPY OF SUCH RESOLUTION SHALL  BE  RETAINED  BY  THE  STATE
COMPTROLLER FOR RECORD KEEPING PURPOSES ONLY.
  (ii) The governing board of a local government that has designated one
or  more  banks,  SAVINGS  BANKS,  SAVINGS AND LOAN ASSOCIATIONS, CREDIT
UNIONS or trust companies for the deposit of public  funds  pursuant  to
subparagraph (i) of this paragraph may, in its discretion, authorize the
designated  bank,  SAVINGS  BANK,  SAVINGS  AND LOAN ASSOCIATION, CREDIT
UNION or trust company to arrange for the redeposit of the local govern-
ment's funds in one or more banking institutions, as defined in  section
nine-r  of  the  banking  law,  for the account of the local government,
through a deposit placement program that  meets  all  of  the  following
conditions:
  (A)  On  or  after  the  date  that  the  local government's funds are
received, the designated bank, SAVINGS BANK, SAVINGS  AND  LOAN  ASSOCI-
ATION,  CREDIT  UNION or trust company (I) arranges for the redeposit of
such funds into deposit accounts in one or more banking institutions and
(II) serves as custodian for the local government with  respect  to  the
funds redeposited into such accounts.
  (B)  Local  government  funds  deposited in a designated bank, SAVINGS
BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION  or  trust  company  in
accordance  with  this  subparagraph  and  held  in the designated bank,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
ny in excess of the amount insured  by  the  federal  deposit  insurance
corporation pending redeposit of the funds pursuant to this subparagraph
shall be secured in accordance with subdivision three of this section.
  (C)  The  full  amount  of  local  government funds redeposited by the
designated bank, SAVINGS BANK,  SAVINGS  AND  LOAN  ASSOCIATION,  CREDIT
UNION  or  trust  company  into deposit accounts in banking institutions
pursuant to this subparagraph (plus accrued interest, if any)  shall  be
insured by the federal deposit insurance corporation.
  (D)  At  the same time that the money of the local government is rede-
posited pursuant to this subparagraph, the selected depository  receives
an  amount  of  deposits  from customers of other financial institutions
pursuant to the deposit placement program that are at least equal to the
amount of the local government's funds  redeposited  by  the  designated
bank,  SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust
company.

S. 7415                             3

  b. Except as otherwise provided by law, all deposits shall be made  to
the credit of the local government. The deposit of public funds pursuant
to this subdivision shall release the officer making the deposit and his
or her surety from any liability for loss of such public funds by reason
of the default or insolvency of any such bank, SAVINGS BANK, SAVINGS AND
LOAN ASSOCIATION, CREDIT UNION or trust company.
  c.  The  governing  board  of  a  local government, in which a banking
development district has been designated by the superintendent of finan-
cial services pursuant to section ninety-six-d of the banking  law,  may
designate  a  bank,  SAVINGS  BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT
UNION, trust company or national bank located in such district  for  the
deposit  of  public  funds,  the  disposition  of which is not otherwise
provided for by law, received by the chief fiscal officer or other offi-
cer authorized by law to make such deposits. Such designation  shall  be
by  resolution  of  the  governing board or, in the case of a city, such
other body as may be authorized or required by law to designate  deposi-
tories.    Such resolution shall specify the maximum amount which may be
kept on deposit at any time with such bank, SAVINGS  BANK,  SAVINGS  AND
LOAN  ASSOCIATION,  CREDIT UNION, trust company or national bank located
in such district.  THE GOVERNING BOARD OF EVERY LOCAL  GOVERNMENT  SHALL
FORWARD A COPY OF SUCH RESOLUTION TO THE OFFICE OF THE STATE COMPTROLLER
WHO  SHALL  RETAIN  SUCH  COPY  UNTIL  SUCH  RESOLUTION  IS  AMENDED  OR
DISSOLVED. A COPY OF SUCH RESOLUTION SHALL  BE  RETAINED  BY  THE  STATE
COMPTROLLER  FOR  RECORD  KEEPING PURPOSES ONLY. Subject to an agreement
between such governing board and such banking institution, public  funds
deposited  in  such  banking  institution may earn a fixed interest rate
which is at or below such banking institution's posted two year  certif-
icate of deposit rate.  In those instances where there is such an agree-
ment,  its  terms  and  conditions shall also be specified in the resol-
ution.  Any such designation, amount, or  agreement  provisions  may  be
changed at any time by further resolution.
  D.  NOTWITHSTANDING  ANY  PROVISION  OF  LAW TO THE CONTRARY, NO BANK,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION  OR  CREDIT  UNION  SHALL  BE
DESIGNATED  FOR  DEPOSITS  OF  FUNDS  PURSUANT TO THE PROVISIONS OF THIS
SECTION OR SECTION ELEVEN OF THIS ARTICLE UNLESS THE TAXES DESCRIBED  IN
SUBDIVISION  ONE  OF  SECTION TWO HUNDRED FIFTY-THREE OF THE TAX LAW ARE
PAID ON LOANS SECURED BY MORTGAGES THAT ARE PROVIDED BY ANY  SUCH  BANK,
SAVINGS  BANK,  SAVINGS  AND LOAN ASSOCIATION OR CREDIT UNION. ANY FUNDS
DEPOSITED IN ANY SUCH BANK, SAVINGS BANK, SAVINGS AND  LOAN  ASSOCIATION
OR  CREDIT  UNION SHALL BE WITHDRAWN IN ACCORDANCE WITH THE TERMS OF ANY
DEPOSIT AGREEMENT IF SUCH TAXES WERE NOT PAID AT THE TIME ANY SUCH MORT-
GAGES WERE RECORDED.
  3. All public deposits in excess  of  the  amount  insured  under  the
provisions of the Federal Deposit Insurance Act OR BY THE NATIONAL CRED-
IT  UNION  ADMINISTRATION  UNDER  THE FEDERAL CREDIT UNION ACT as now or
hereafter amended shall be secured in accordance with this subdivision:
  a. The officers making a deposit may accept a pledge of eligible secu-
rities having in the aggregate a market value  at  least  equal  to  the
aggregate amount of public deposits from such officers, or a pledge of a
pro  rata  portion of a pool of eligible securities having in the aggre-
gate a market value at least equal to the  aggregate  amount  of  public
deposits  from  all such officers within the state at such bank, SAVINGS
BANK, SAVINGS AND LOAN  ASSOCIATION,  CREDIT  UNION  or  trust  company,
together  with a security agreement from the bank, SAVINGS BANK, SAVINGS
AND LOAN ASSOCIATION, CREDIT UNION or trust company. The security agree-
ment and custodial agreement referred to below may be the same agreement

S. 7415                             4

including when the bank, SAVINGS BANK,  SAVINGS  AND  LOAN  ASSOCIATION,
CREDIT  UNION  or  trust  company  holding the public deposits holds the
collateral for the public body.   The security agreement  shall  provide
that  such eligible securities or pro rata portion of a pool of eligible
securities are being pledged by the bank or trust  company  as  security
for the public deposits, together with agreed upon interest, if any, and
any costs or expenses arising out of the collection of such deposit upon
a  default.  It  shall  also  provide for the conditions under which the
securities or pro rata portion of a pool of eligible securities held may
be sold, presented for payment, substituted or released and  the  events
of default which will enable the local government to exercise its rights
against  the  pledged  securities.    Such  agreement  shall include all
provisions deemed necessary and sufficient to secure in  a  satisfactory
manner  the local government's interest in the collateral. The custodial
agreement shall provide that the pledged securities or pro rata  portion
of  a  pool  of  eligible securities will be held by the custodial bank,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
ny as agent of, and custodian for, the local  government,  and  will  be
kept  separate  and apart from the general assets of the custodial bank,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
ny and it shall also provide for the manner in which the custodial bank,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
ny shall confirm the receipt, substitution or release of the collateral.
Such agreement shall provide for the frequency of revaluation of collat-
eral by the custodial bank, SAVINGS BANK, SAVINGS AND LOAN  ASSOCIATION,
CREDIT  UNION or trust company and the substitution of collateral when a
change in the rating of a  security  causes  ineligibility  pursuant  to
paragraph [f] G of subdivision one of this section. Such agreement shall
include  all  provisions  deemed necessary and sufficient to secure in a
satisfactory manner the local government's interest in  the  collateral.
Such  agreement  may also contain such other provisions as the governing
board may deem necessary.
  b. Whenever eligible securities delivered to a custodial bank, SAVINGS
BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company pursu-
ant to this paragraph are transferred by  entries  on  the  books  of  a
federal  reserve bank or other book-entry system operated by a federally
regulated entity without physical delivery of the evidence of such obli-
gations, the records of the custodial bank, SAVINGS  BANK,  SAVINGS  AND
LOAN  ASSOCIATION,  CREDIT  UNION  or  trust  company shall show, at all
times, the interest of the local government in such  securities  or  pro
rata  portion of a pool of eligible securities as set forth in the secu-
rity agreement.
  c. (i) In lieu of or in addition to the deposit  of  eligible  securi-
ties,  the  officers making a deposit may accept an eligible surety bond
payable to such local government as security  for  the  payment  of  one
hundred  percent,  or an eligible letter of credit payable to such local
government as security for the payment of one hundred forty percent,  of
the  aggregate  amount  of  public  deposits  from such officers and the
agreed upon interest, if any. The terms and conditions of  any  eligible
surety bond shall be approved by the governing board.
  (ii)  In lieu of or in addition to the deposit of eligible securities,
the officers making a deposit may, in the case of an irrevocable  letter
of credit issued in favor of the local government by a federal home loan
bank  whose  commercial  paper and other unsecured short-term debt obli-
gations are rated in  the  highest  rating  category  by  at  least  one
nationally  recognized  statistical  rating  organization,  accept  such

S. 7415                             5

letter of credit payable to such local government as  security  for  the
payment  of one hundred percent of the aggregate amount of public depos-
its from such officers and the agreed upon interest, if any.
  d.  For  purposes  of  determining  the  market value of securities as
required by this subdivision:
  (i) The eligible securities described in subparagraphs (viii), (x) and
(xi) of paragraph [f] G of subdivision one  of  this  section  shall  be
valued at eighty percent of their market value.
  (ii)  The  eligible securities described in subparagraph (ix) of para-
graph [f] G of subdivision one of this section shall be valued at seven-
ty percent of their market value.
  (iii) Of the eligible securities described in subparagraphs (v),  (vi)
and  (vii)  of paragraph [f] G of subdivision one of this section, those
securities rated in the highest category shall be valued at one  hundred
percent  of  their  market value;   those securities rated in the second
highest rating category shall be  valued  at  ninety  percent  of  their
market  value;    and those securities rated in the third highest rating
category shall be valued at eighty percent of their market value.   When
two  nationally recognized statistical rating organizations rate a secu-
rity in two different categories, the security shall be considered to be
rated in the higher of the two categories.
  4. (a) Notwithstanding any other provision of law to the contrary, the
chief fiscal officer, or other officer authorized by law to make  depos-
its,  may,  subject  to  the  approval  of the governing body of a local
government, by resolution, enter into a contract with a courier  service
for  the  purpose  of  causing  the deposit of public funds with a bank,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
ny as provided in this section.
  (b) The entrusting of public funds for deposit pursuant  to  paragraph
(a)  of this subdivision shall release the officer entrusting the public
funds to the courier service and his or her surety  from  any  liability
for  loss  of such public funds by the courier service in the process of
delivering such public funds  to  the  designated  bank,  SAVINGS  BANK,
SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company.
  (c)  The local government authorizing the deposit of public funds by a
courier service pursuant to paragraph  (a)  of  this  subdivision  shall
require  the courier service to obtain a surety bond for the full amount
entrusted to the courier, payable to the local government  and  executed
by  an  insurance  company  authorized to do business in this state, the
claims paying ability of which is rated in the highest  rating  category
by  at least two nationally recognized statistical rating organizations,
to insure against any loss of public  funds  entrusted  to  the  courier
service  for  deposit or failure to deposit the full amount entrusted to
the courier.
  (d) A deposit made by a courier on behalf of a local government  shall
be  deemed  to  be  a  deposit made by the chief fiscal officer or other
officer entrusting such funds for purposes of the requirements contained
in this section for securing public deposits.
  (e) A bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION,  CREDIT  UNION
or  trust company may, from time to time and as agreed upon with a local
government, reimburse all or part of, but not more than, the actual cost
incurred by  the  local  government  in  transporting  cash,  negotiable
instruments  or  other items for deposit through a courier service.  Any
such reimbursement agreement shall apply only  to  a  specified  deposit
transaction,  and  may  be subject to such terms, conditions and limita-
tions as the bank, SAVINGS BANK, SAVINGS AND  LOAN  ASSOCIATION,  CREDIT

S. 7415                             6

UNION  or  trust  company  deems necessary to ensure sound banking prac-
tices, including, but not limited to, any terms, conditions  or  limita-
tions  that  may  be required by the department of financial services or
other federal or state authority.
  S  4.  Subdivision  2  of  section 11 of the general municipal law, as
amended by chapter 128 of the laws  of  2012,  is  amended  to  read  as
follows:
  2. a. The governing board of any local government or, if the governing
board  so  delegates,  the  chief fiscal officer or other officer having
custody of the moneys may temporarily invest  moneys  not  required  for
immediate  expenditure,  except moneys the investment of which is other-
wise provided for by law, either: (1) in special  time  INTEREST-BEARING
deposit  accounts  in,  or  certificates  of  deposit issued by, a bank,
SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
ny located and authorized to do  business  in  this  state;  or  (2)  in
accordance with all of the following conditions:
  (i)  the moneys are invested through a bank, SAVINGS BANK, SAVINGS AND
LOAN ASSOCIATION, CREDIT UNION or trust company located  and  authorized
to do business in this state;
  (ii)  the  bank,  SAVINGS  BANK,  SAVINGS AND LOAN ASSOCIATION, CREDIT
UNION or trust company arranges for the deposit of the moneys in certif-
icates of deposit in one or more banking  institutions,  as  defined  in
section  nine-r of the banking law, for the account of the local govern-
ment;
  (iii) the full amount of principal and accrued interest of  each  such
certificate  of deposit must be insured by the federal deposit insurance
corporation;
  (iv) the bank, SAVINGS BANK,  SAVINGS  AND  LOAN  ASSOCIATION,  CREDIT
UNION  or  trust company acts as custodian for the local government with
respect to such certificates of deposit issued  for  the  local  govern-
ment's account; and
  (v)  at the same time that the local government's moneys are deposited
and the certificates of deposit are issued for the account of the  local
government, the bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT
UNION  or trust company receives an amount of deposits from customers of
other financial institutions equal to or greater than the amount of  the
moneys invested by the local government through the bank or trust compa-
ny.
  b.  For  any  investment made pursuant to paragraph a of this subdivi-
sion, such time  INTEREST-BEARING  deposit  account  or  certificate  of
deposit shall be payable within such time as the proceeds shall be need-
ed to meet expenditures for which such moneys were obtained and provided
further  that  such time INTEREST-BEARING deposit account or certificate
of deposit be secured in the same manner as  is  provided  for  securing
deposits  of  public  funds  by subdivision three of section ten of this
article.
  S 5. Subdivision 1 and the  opening  paragraph  of  subdivision  2  of
section  105 of the state finance law, subdivision 1 as amended by chap-
ter 204 of the laws of 2002 and the opening paragraph of  subdivision  2
as  amended  by chapter 154 of the laws of 1953, are amended and two new
subdivisions 7 and 8 are added to read as follows:
  1. All moneys received by the commissioner of taxation and finance  on
account of the state, excepting such moneys as are required by law to be
deposited to the credit of the comptroller, but including such moneys as
are thereafter paid into the state treasury by the comptroller, shall be
deposited  by the commissioner of taxation and finance within three days

S. 7415                             7

after the receipt thereof, either as a demand deposit  or  an  interest-
bearing [time] deposit (other than a time certificate of deposit), as he
OR SHE and the comptroller may determine, in such banks, trust companies
[and  industrial banks], SAVINGS BANKS, SAVINGS AND LOAN ASSOCIATIONS OR
CREDIT UNIONS as in his OR HER opinion and  the  opinion  of  the  comp-
troller  are  secure.  The  moneys  so  deposited shall be placed to the
account of the commissioner of taxation and finance.  He  OR  SHE  shall
keep  a bankbook in which shall be entered his OR HER account of deposit
in and moneys drawn from the banks [and], trust  companies  [and  indus-
trial  banks],  SAVINGS  BANKS,  SAVINGS AND LOAN ASSOCIATIONS OR CREDIT
UNIONS in which deposits are made by him OR HER, which he OR  SHE  shall
exhibit  to the comptroller for his OR HER inspection on the first Tues-
day of every month and oftener if required. He OR SHE shall not draw any
moneys from such banks, trust companies [or industrial banks  unless  by
checks  signed and countersigned], SAVINGS BANKS, SAVINGS AND LOAN ASSO-
CIATIONS OR CREDIT UNIONS DESIGNATED in the manner prescribed by section
one hundred one OF THIS ARTICLE, unless otherwise provided  by  law.  No
moneys  shall  be  paid  by  any such bank, trust company [or industrial
bank], SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION OR CREDIT UNION out of
any such deposit except upon such checks.   Moneys may be  paid  through
electronic  transfer  in  accordance  with  procedures  developed by the
commissioner of taxation and finance and the comptroller and  consistent
with  the  requirements  of  this  section  for recording payments. Such
payments through electronic transfer shall be considered,  for  purposes
of  this  chapter,  to be moneys drawn by check.  Every such bank, trust
company [or industrial bank], SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION
OR CREDIT UNION shall transmit to the comptroller monthly statements  of
all  moneys  received  and  paid by it on account of the commissioner of
taxation and finance.
  Every bank, trust company [and industrial bank], SAVINGS BANK, SAVINGS
AND LOAN ASSOCIATION OR CREDIT UNION designated for the deposit of state
moneys under the provisions of this section shall, before  deposits  are
made:
  7.  PUBLIC  FUNDS DEPOSITED INTO A SAVINGS BANK, FEDERAL SAVINGS BANK,
CREDIT UNION, FEDERAL CREDIT UNION,  SAVINGS  AND  LOAN  ASSOCIATION  OR
FEDERAL  SAVINGS  AND  LOAN ASSOCIATION, SHALL BE LIMITED TO ONE MILLION
DOLLARS PER SAVINGS BANK, FEDERAL SAVINGS BANK,  CREDIT  UNION,  FEDERAL
CREDIT  UNION,  SAVINGS AND LOAN ASSOCIATION OR FEDERAL SAVINGS AND LOAN
ASSOCIATION.
  8. FOR PURPOSES OF THIS SECTION, THE TERMS  "CREDIT  UNION",  "SAVINGS
BANK" AND "SAVINGS AND LOAN ASSOCIATION" SHALL HAVE THE MEANING PROVIDED
IN SUBDIVISION ONE OF SECTION TEN OF THE GENERAL MUNICIPAL LAW.
  S  6.  Section 106 of the state finance law, as amended by chapter 155
of the laws of 2012 and subdivision D as added by  chapter  128  of  the
laws of 2012, is amended to read as follows:
  S  106.  Deposit  of  moneys by state officers, state institutions and
charitable and benevolent institutions. 1. Such moneys received  by  the
commissioner  of taxation and finance as are now deposited to the credit
of the comptroller pursuant to statute, and  thereafter  paid  into  the
state  treasury,  shall  be deposited by him or her to the credit of the
comptroller in such bank [or], trust company, SAVINGS BANK, SAVINGS  AND
LOAN  ASSOCIATION  OR  CREDIT UNION, as shall be designated by the comp-
troller at such rate of interest, if any, as shall be agreed upon by the
depositary and the comptroller.
  2. All other moneys received  by  the  commissioner  of  taxation  and
finance  except  as provided in section one hundred five of this article

S. 7415                             8

and all moneys received by any  other  state  officer  or  other  person
receiving moneys belonging to the state, or for which such state officer
or  other person may be responsible in his or her official capacity, and
all moneys received by any state institution, except for moneys received
pursuant to a clinical practice plan established pursuant to subdivision
fourteen  of  section  two  hundred six of the public health law and all
moneys received from the state by any charitable or benevolent  institu-
tion  supported  in whole or in part by the state, shall be deposited to
his, her, or its credit in such bank [or], trust company, SAVINGS  BANK,
SAVINGS  AND LOAN ASSOCIATION OR CREDIT UNION, as shall be designated by
the comptroller at such rate of interest, if any,  as  shall  be  agreed
upon by the depositary and the comptroller.
  3.  Every  [bank  or trust company] DEPOSITARY designated by the comp-
troller for the deposit of any such moneys
  [A.] A. Shall give a bond with sufficient sureties for the security of
such deposit, to be approved by the comptroller and filed in his or  her
office,
  [B.]  B. Or shall, in lieu of such surety bond, with the permission of
the comptroller deposit with the comptroller such outstanding  unmatured
bonds  or  notes  or  such certified check or checks as are described in
section one hundred five of this article. The comptroller may, in his or
her discretion, accept and substitute for any surety bond or undertaking
given, pursuant to this section, a bond or undertaking in such form  and
with  other  surety  or  sureties, or other security as required by this
section, for such sums as may be prescribed and approved  by  the  comp-
troller  for the safe keeping and prompt payment of such moneys on legal
demand therefor with interest, if any, and the comptroller may thereupon
execute and deliver to the surety or sureties, upon the former  bond  or
undertaking,  a  release  of  such surety or sureties from any liability
accruing subsequent to the date of such release. Such release shall  not
relieve  such surety or sureties from any obligation for losses incurred
prior to the date thereof. On the withdrawal of all moneys from any such
depository and a closing and settlement  of  the  account  thereof,  the
comptroller  may in his or her discretion certify to such settlement and
release to the obligor or owner or  owners  entitled  thereto,  of  such
surety  bond,  undertaking, certified check or checks, or other security
deposited with him or her.
  [C.] C. Notwithstanding any other  provisions  of  this  section,  the
comptroller shall not designate for the deposit of moneys by state offi-
cers,  state  institutions  and  charitable  and benevolent institutions
supported in whole or in part by the  state  a  banking  institution  to
which the Community Reinvestment Act of 1977, United States P.L. 95-128,
applies unless such institution shall have received a record of perform-
ance  no  lower  than  "satisfactory"  as  determined  under such act in
accordance with section twenty-eight-b of the banking law.
  [D.] D. In lieu of a security bond as prescribed under subdivision [A]
A of this section or other security as prescribed under subdivision  [B]
B  of  this  section, the comptroller may authorize a designated bank or
trust company to arrange for the  redeposit  of  the  moneys  through  a
deposit placement program that meets all of the following conditions:
  (1) The designated bank or trust company arranges for the redeposit of
the  moneys into deposit accounts with one or more banking institutions,
as defined in section nine-r of the banking law, for the account of  the
state,  and serves as custodian for the state with respect to the moneys
redeposited into such deposit accounts.

S. 7415                             9

  (2) Moneys held by a designated bank or trust company pending redepos-
it pursuant to paragraph one of this subdivision that are in  excess  of
the amount insured by the federal deposit insurance corporation shall be
secured in accordance with subdivision [A or B] A OR B of this section.
  (3)  The  full  amount of the moneys redeposited into deposit accounts
pursuant to paragraph one of this subdivision, plus accrued interest, if
any, shall be insured by the federal deposit insurance corporation.
  (4) At the same time that the moneys are redeposited pursuant to para-
graph one of this subdivision, the  designated  bank  or  trust  company
receives  an amount of deposits from customers of other financial insti-
tutions pursuant to the deposit placement  program  that  are  at  least
equal  to the amount of the moneys redeposited by the designated bank or
trust company.
  4. This section shall not apply to any funds held by  the  superinten-
dent of financial services in a fiduciary capacity.
  5.  PUBLIC  FUNDS DEPOSITED INTO A SAVINGS BANK, FEDERAL SAVINGS BANK,
CREDIT UNION, FEDERAL CREDIT UNION,  SAVINGS  AND  LOAN  ASSOCIATION  OR
FEDERAL  SAVINGS  AND  LOAN ASSOCIATION, SHALL BE LIMITED TO ONE MILLION
DOLLARS PER SAVINGS BANK, FEDERAL SAVINGS BANK,  CREDIT  UNION,  FEDERAL
CREDIT  UNION,  SAVINGS AND LOAN ASSOCIATION OR FEDERAL SAVINGS AND LOAN
ASSOCIATION.
  6. FOR PURPOSES OF THIS SECTION, THE TERMS  "CREDIT  UNION",  "SAVINGS
BANK" AND "SAVINGS AND LOAN ASSOCIATION" SHALL HAVE THE MEANING PROVIDED
IN SUBDIVISION ONE OF SECTION TEN OF THE GENERAL MUNICIPAL LAW.
  S 7. Severability. If any clause, sentence, paragraph, section or part
of  this act shall be adjudged by any court of competent jurisdiction to
be invalid, such judgment shall not affect, impair  or  invalidate  such
clause,  sentence,  paragraph, section or part thereof directly involved
in the controversy in which such judgment shall have been rendered.
  S 8. This act shall take effect immediately; provided,  however,  that
sections three and six of this act shall take effect October 3, 2013.

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