|Assembly Actions - Lowercase
Senate Actions - UPPERCASE
|Jul 18, 2012||signed chap.128|
|Jul 06, 2012||delivered to governor|
|Jun 12, 2012||returned to assembly|
3rd reading cal.528
substituted for s5135
|Jun 12, 2012||substituted by a8971|
|Apr 25, 2012||advanced to third reading|
|Apr 19, 2012||2nd report cal.|
|Apr 18, 2012||1st report cal.528|
|Feb 06, 2012||reported and committed to finance|
|Jan 04, 2012||referred to local government|
|May 03, 2011||referred to local government|
senate Bill S5135Signed By Governor
Authorizes the state, local governments and public authorities to arrange for redeposit of moneys through a deposit placement program
Archive: Last Bill Status Via A8971 - Signed by Governor
- In Committee
- On Floor Calendar
- Passed Senate
- Passed Assembly
- Delivered to Governor
- Signed by Governor
view actions (13)
Jun 12, 2012 - floor VoteA8971590floor59Aye0Nay0Absent3Excused0Abstained
show floor vote details
Floor Vote: Jun 12, 2012aye (59)
Apr 18, 2012 - Finance committee VoteS5135241committee24Aye1Nay8Aye with Reservations0Absent2Excused0Abstained
Feb 6, 2012 - Local Government committee VoteS513580committee8Aye0Nay0Aye with Reservations0Absent0Excused0Abstained
- show floor vote details
S5135 - Bill Details
- See Assembly Version of this Bill:
- Law Section:
- General Municipal Law
- Laws Affected:
- Amd §§10 & 11, Gen Muni L; amd §106, St Fin L; add §2927, Pub Auth L
S5135 - Bill Texts
Authorizes the state, local governments and public authorities to arrange for redeposit of moneys through a deposit placement program through a bank or trust company that serves as custodian with respect to the moneys and arranges for the redeposit of the moneys in one or more banking institutions, the monies being secured, provided that the depository receives deposits from customers of other financial institutions that are at least equal to the amount of the moneys so invested.
view sponsor memo
TITLE OF BILL:
the general municipal law, the state finance law and the public
authorities law, in relation to authorizing the state, local governments
and public authorities to arrange for redeposit of moneys through a
deposit placement program
PURPOSE OR GENERAL IDEA OF BILL:
To provide alternative options for obtaining FDIC insurance coverage
for government deposits placed in bank accounts, thereby reducing the
cost of collateralizing such funds.
SUMMARY OF SPECIFIC PROVISIONS:
Amends appropriate sections of Law to allow 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
following 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 government; the full amount of the principal
and accrued interest are insured by the FDIC; the local bank acts as
custodian for the government; and the local bank receives an equal or
greater amount of funds from other depository institutions.
This bill provides an alternative option for ensuring the security of
public deposits. Currently, government is 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.
Further, the bill addresses an area of the laws protecting deposits
and investments of public funds that have not kept pace with changing
federal deposit insurance coverage provisions. New York's system of
safeguarding public funds has proven extremely effective throughout
virtually every economic and interest rate cycle in protecting every
dollar of funds deposited in an FDIC-insured bank or trust company
from loss. The system relies on full collateralization (in some
cases, over collateralization) of deposit in excess of deposit
insurance limits. However, the provision dealing with those deposits
covered by FDIC insurance has not been changed since first enacted.
Currently, the FDIC provides 100% coverage for deposits in
non-interest-bearing transaction accounts and coverage of $250,000 per
depositor for deposits in all other accounts. However, over the past
ten years, the FDIC has also acknowledged coverage far in excess of
the $250,000 per depositor limit for accounts that are not
non-interest bearing transaction accounts. If a deposit in an
FDIC-insured bank or
trust company is divided into multiple deposits, all under the
$250,000 limit, and deposits in that amount are made into other banks
and trust companies, the amount insured in increased by a multiple
representing the total number of banks and trust companies into which
deposits are made. Thus, a $10 million local government deposit can
have 100% FDIC deposit insurance if it is split among more than 40
banks and trust companies.
At the same time, each of the banks into which a piece of the original
deposit was made, make a reciprocal deposit in the same amount back
into the bank that holds the government's original deposit. This
allows the full amount of the government's deposit to remain
available for loans and investments in the originating bank's
community. Because the cost of deposit insurance coverage is
generally much lower than the cost of alternative forms of
collateralization acceptable under the General Municipal Law, State
Finance Law and Public Authorities Law, converting deposits requiring
collateralization into deposits covered by deposit insurance with
materially reduce the costs of carrying deposits both for the
depository banks and for the local government making the deposit.
More than 40 states have already authorized the use of this type of
reciprocal deposit system. It is in
use in New York for every type of deposit - consumer,
business, tax-exempt organization - other than government deposits.
This legislation would allow New York State, its municipalities,
agencies and public authorities to reduce the cost of making
deposits, to more easily track and manage the collateral backing
deposits, and to speed recovery of funds in the failure of a bank or
This is a new bill.
None to the State. Local governments are expected to benefit from the
reduced costs involved in collateralizing deposits.
view full text
S T A T E O F N E W Y O R K ________________________________________________________________________ 5135 2011-2012 Regular Sessions I N S E N A T E May 3, 2011 ___________ Introduced by Sen. MARTINS -- 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, the state finance law and the public authorities law, in relation to authorizing the state, local governments and public authorities to arrange for redeposit of moneys through a deposit placement program THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph a of subdivision 2 of section 10 of the general municipal law, as amended by chapter 623 of the laws of 1998, is amended to read as follows: a. (I) The governing board of every local government shall designate one or more banks 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 speci- fy the maximum amount which may be kept on deposit at any time in each such bank or trust company. Such designations and amounts may be changed at any time by further resolution. (II) THE GOVERNING BOARD OF A LOCAL GOVERNMENT THAT HAS DESIGNATED ONE OR MORE BANKS OR TRUST COMPANIES FOR THE DEPOSIT OF PUBLIC FUNDS PURSU- ANT TO SUBPARAGRAPH (I) OF THIS PARAGRAPH MAY, IN ITS DISCRETION, AUTHORIZE THE DESIGNATED BANK OR TRUST COMPANY TO ARRANGE FOR THE REDE- POSIT OF THE LOCAL GOVERNMENT'S FUNDS IN ONE OR MORE BANKING INSTI- TUTIONS, 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 OR TRUST COMPANY (I) ARRANGES FOR THE EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11304-01-1 S. 5135 2 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 OR TRUST COMPANY IN ACCORDANCE WITH THIS SUBPARAGRAPH AND HELD IN THE DESIGNATED BANK OR TRUST COMPANY 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 OR TRUST COMPANY INTO DEPOSIT ACCOUNTS IN BANKING INSTI- TUTIONS 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 OR TRUST COMPANY. S 2. 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, 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 (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 FINANCIAL INSTITUTIONS 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. 5135 3 S 3. Section 106 of the state finance law is amended by adding a new subdivision D to read as follows: D. IN LIEU OF A SECURITY BOND AS PRESCRIBED UNDER SUBDIVISION A OF THIS SECTION OR OTHER SECURITY AS PRESCRIBED UNDER SUBDIVISION B OF THIS SECTION, THE COMPTROLLER MAY AUTHORIZE A DESIGNATED BANK OR TRUST COMPA- NY TO ARRANGE FOR THE REDEPOSIT OF THE MONEYS THROUGH A DEPOSIT PLACE- MENT 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. (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 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. S 4. The public authorities law is amended by adding a new section 2927 to read as follows: S 2927. INVESTMENT OF FUNDS BY PUBLIC AUTHORITIES AND PUBLIC BENEFIT CORPORATIONS IN DEPOSITS INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPO- RATION. NOTWITHSTANDING ANY INCONSISTENT PROVISION OF THIS CHAPTER OR ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, EVERY CORPORATION WHETHER OR NOT SUCH CORPORATION IS OTHERWISE GOVERNED BY THIS CHAPTER, MAY TEMPORARILY INVEST MONEYS NOT REQUIRED FOR IMMEDIATE EXPENDITURE IN ACCORDANCE WITH THE FOLLOWING CONDITIONS: 1. THE MONEYS ARE INVESTED THROUGH A BANK OR TRUST COMPANY LOCATED AND AUTHORIZED TO DO BUSINESS IN THIS STATE SELECTED BY THE CORPORATION; 2. THE SELECTED BANK OR TRUST COMPANY ARRANGES FOR THE REDEPOSIT OF THE MONEYS IN CERTIFICATES OF DEPOSIT AND OTHER DEPOSIT ACCOUNTS IN ONE OR MORE BANKING INSTITUTIONS, AS DEFINED IN SECTION NINE-R OF THE BANK- ING LAW, FOR THE ACCOUNT OF THE CORPORATION; 3. THE FULL AMOUNT OF PRINCIPAL AND ACCRUED INTEREST OF EACH SUCH DEPOSIT IS INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION; 4. THE SELECTED BANK OR TRUST COMPANY IN THIS STATE ACTS AS CUSTODIAN FOR THE CORPORATION WITH RESPECT TO THE FUNDS REDEPOSITED PURSUANT TO THIS SECTION; AND 5. AT THE SAME TIME THAT THE CORPORATION'S MONEYS ARE REDEPOSITED PURSUANT TO THIS SECTION, THE SELECTED BANK OR TRUST COMPANY IN THIS STATE RECEIVES AN AMOUNT OF DEPOSITS FROM CUSTOMERS OF OTHER FINANCIAL INSTITUTIONS EQUAL TO OR GREATER THAN THE AMOUNT OF THE MONEYS INVESTED BY THE CORPORATION THROUGH THE SELECTED BANK OR TRUST COMPANY IN THIS STATE. S 5. This act shall take effect immediately.
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