NY State Assembly Bill 2009-A9099

Assembly Bill A9099

2009-2010 Legislative Session

Expands the definition of banking entities authorized for the deposit of temporary investments funds

download bill text pdf

Archive: Last Bill Status - In Assembly Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jul 01, 2010	held for consideration in ways and means
Mar 09, 2010	reported referred to ways and means
Jan 06, 2010	referred to local governments
Aug 17, 2009	referred to local governments

2009-A9099 (ACTIVE) - Details

See Senate Version of this Bill:: S6929
Current Committee:: Assembly Ways And Means
Law Section:: General Municipal Law
Laws Affected:: Amd §11, Gen Muni L

2009-A9099 (ACTIVE) - Summary

Expands the definition of banking entities authorized for the deposit of temporary investments funds.

2009-A9099 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:A9099

TITLE  OF BILL:   An act to amend the general municipal law, in relation
to expanding the definition  of  banking  entities  authorized  for  the
deposit of temporary investments funds

PURPOSE  OR  GENERAL  IDEA OF BILL:   To provide alternative options for
obtaining FDIC insurance coverage for local government  deposits  placed
in  bank  accounts,  thereby  reducing  the cost of collateralizing such
funds.

SUMMARY OF SPECIFIC PROVISIONS:   Amends Section 11(2)  of  the  General
Municipal  Law to allow local government deposits to be invested through
local banks in FDIC-insured accounts through a reciprocal deposit-taking
program which provides deposit insurance coverage in excess of $250,000.

Specifically, the bill allows investments which meet all of the  follow-
ing  conditions:  moneys  are  invested  through  a bank located in this
state; the bank arranges for the  deposit  of  funds  in  other  banking
institutions,  as  defined  in  section  9-r of the Banking Law, for the
account of the local government; the full amount of  the  principal  and
accrued  interest are insured by the FDIC; the local bank acts as custo-
dian for the local government; and the local bank receives an  equal  or
greater amount of funds from other depository institutions.

JUSTIFICATION:    This  bill provides an alternative option for ensuring

the security  of  public  deposits.  Currently,  local  governments  are
authorized to temporarily invest moneys in special time deposit accounts
or  certificates of deposit issued by a bank or trust company located in
this state. When the amount deposited exceeds FDIC  insurance  coverage,
the:,  bank must either secure the deposits by pledging certain eligible
securities which have an aggregate market value that is at  least  equal
to the aggregate amount of the public deposits, or by offering an eligi-
ble  surety  bond or letter of credit by a Federal Home Loan Bank. While
these requirements help ensure the security of the deposits,  they  also
result in increased costs.

Over  the  past couple of years, several states have modified their laws
and policies to allow an alternative  arrangement  for  securing  public
deposits.  Under  this scenario, the local bank arranges for the deposit
of the public funds in other FDIC-insured banks which issue certificates
of deposit for the account of the local government.  As  a  result,  the
full  amount  of principal and accrued interest for each CD are eligible
for FDIC insurance.

This bill would allow a similar option for public deposits made by local
governments in New York State. In order to ensure that the total  amount
of the local government's investment remains available for lending with-
in  the local community, the bill would require that the depository bank
must receive deposits from other insured institutions which  are  equiv-
alent to the total amount of the local .  government's investment.

PRIOR LEGISLATIVE H STORY: New bill

FISCAL  IMPLICATIONS:  None to the State. Local governments are expected
to benefit from the reduced costs involved in collateralizing deposits,

EFFECTIVE DATE:  Immediately

2009-A9099 (ACTIVE) - Bill Text download pdf

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

                                  9099

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             August 17, 2009
                               ___________

Introduced  by  M. of A. HOYT -- read once and referred to the Committee
  on Local Governments

AN ACT to amend the general municipal law, in relation to expanding  the
  definition of banking entities authorized for the deposit of temporary
  investments funds

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

  Section 1. Subdivision 2 of section 11 of the general  municipal  law,
as  amended  by  chapter  708 of the laws of 1992, 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 deposit accounts
in, or certificates of deposit  issued  by,  a  bank  or  trust  company
located  and authorized to do business in this state[, provided however,
that]; OR (2) IN ACCORDANCE WITH ALL OF THE FOLLOWING CONDITIONS:
  (I) THE MONEYS ARE INVESTED THROUGH A BANK OR  TRUST  COMPANY  LOCATED
AND AUTHORIZED TO DO BUSINESS IN THIS STATE;
  (II)  THE BANK OR TRUST COMPANY ARRANGES FOR THE DEPOSIT OF THE MONEYS
IN CERTIFICATES OF DEPOSIT IN  ONE  OR  MORE  BANKING  INSTITUTIONS,  AS
DEFINED IN SECTION NINE-R OF THE BANKING LAW, OR TRUST COMPANIES INSURED
UNDER  THE FEDERAL DEPOSIT INSURANCE ACT, WHEREVER LOCATED IN THE UNITED
STATES, FOR THE ACCOUNT OF THE LOCAL GOVERNMENT;
  (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 OR TRUST COMPANY ACTS AS CUSTODIAN FOR THE LOCAL GOVERN-
MENT WITH RESPECT TO SUCH CERTIFICATES OF DEPOSIT ISSUED FOR  THE  LOCAL
GOVERNMENT'S ACCOUNT; AND

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14631-01-9

A. 9099                             2

  (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  OR  TRUST COMPANY RECEIVES AN AMOUNT OF DEPOSITS
FROM CUSTOMERS OF OTHER INSURED DEPOSITORY INSTITUTIONS WHEREVER LOCATED
IN  THE  UNITED STATES EQUAL TO OR GREATER THAN THE AMOUNT OF THE MONEYS
INVESTED BY THE LOCAL GOVERNMENT THROUGH THE BANK OR TRUST COMPANY.
  B. FOR ANY INVESTMENT MADE PURSUANT TO PARAGRAPH A  OF  THIS  SUBDIVI-
SION, such time deposit account or certificate of deposit shall be paya-
ble  within  such  time as the proceeds shall be needed to meet expendi-
tures for which such moneys were obtained and provided further that such
time deposit account or certificate of deposit be secured  in  the  same
manner  as is provided for securing deposits of public funds by subdivi-
sion three of section ten of this article.
  S 2. This act shall take effect immediately.

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