BILL NUMBER:  S3704

 TITLE OF BILL :
An act to amend the banking law, in relation to the imposition of
certain fees


 PURPOSE :
To help encourage smaller financial institutions to consider
converting to a state charter by establishing a lower application fee.

 SUMMARY OF PROVISIONS :
Section 18-a of the Banking Law is amended to establish a lower
application fee for smaller banks, thrifts and credit unions which are
converting from a federal charter to a state charter.

Section 34 of the Banking Law is amended to provide that the
Superintendent of Banks shall set the fee for service of process
involving foreign banks, provided however that such fee shall not
exceed the fee level established by the Legislature for service of
process upon the Department of State pursuant to section 104-A(c) of
the Business Corporation Law. The bill also provides that no fee shall
be collected for process served on behalf of a municipality.

 JUSTIFICATION :
Section 18-a of the Banking Law was added in 2005 to set new fee
              

levels for applications by banking institutions and financial service
companies. These fee levels are intended to better reflect the
Department's actual costs to investigate and process an application.

As a way to promote the state charter, this bill seeks to establish a
lower application fee level for smaller banking institutions which may
be considering a conversion from a federal charter to a state charter.
Instead of the standard application fee of $12,500, this bill would
set a $1,000 application fee for banking institutions which have less
than $100 million in assets. Smaller entities are the ones which are
most likely to factor the level of application costs (including the
application fee itself) into their consideration of whether to change
charters. Lowering the Department's application fee will help address
this concern and eliminate one possible obstacle to a conversion.

It should be noted that both the Office of the Comptroller of the
Currency (OCC), which regulates national banks, and the Office of
Thrift Supervision, which regulates federal savings banks and savings
and loan associations, charge lower application fees for an
institution which is converting to a federal charter than for a new
institution. This bill would establish a similar distinction in State
law between these different types of applications.

Maintaining and increasing the number of state charters is important
for preserving the State's role in regulating and overseeing the
financial services industry. New institutions will also help support
the Department's budget through the assessments they pay, thereby
helping to spread the total regulatory costs among more institutions.
Section 200 of the Banking Law currently requires foreign banking
corporations to appoint the Superintendent of Banks as their true and
lawful attorney upon whom all process in any action or proceeding
against them may be served. For each service of process, Section 34 of
the Banking Law directs the Superintendent to collect a two dollar
fee. This fee level has remained unchanged since at least 1892, and
does not reflect the Banking Department's costs to process this
paperwork.

This bill authorizes the Superintendent of Banks to establish a
service of process fee which better reflects the Department's costs.
However, the fee may not exceed the fee level authorized by the State
Legislature under Section 104-A of the Business corporation Law for
service of process upon the Secretary of State (this fee is currently
$40). It is appropriate to give the superintendent of Banks the
flexibility to set an appropriate fee level, but not to exceed a level
which the State Legislature has determined is an appropriate fee level
for the Department of State to charge for service of process. Also,
the Business Corporation Law currently exempts municipalities from
having to pay a service of process fee, and this bill would enact a
similar exemption in the Banking Law.

 LEGISLATIVE HISTORY :
S.4783 of 2008 Died in Committee
S.4783 of 2007 Reported to Senate Calendar
S.7528 of 2006 Reported to Senate Calendar

 FISCAL IMPLICATIONS :
None to the State. The Banking Department is fully funded by the
regulated financial services industry. Each year, the Department
receives varying amounts of revenue from the examination and
application fees it charges, and then raises the remaining balance of
its budget through assessments charged to the industry. Regardless of
whether this bill results in slightly higher or slightly lower fee
revenues, the Department's total budget remains unchanged. All that
will vary is the remaining amount which the Department needs to raise
through its assessments.

 EFFECTIVE DATE :
Immediately.