TITLE OF BILL: An act to establish a commission to study the feasibil-
ity of establishing a bank owned by the state of New York or by a public
authority constituted by the state of New York; and providing for the
repeal of such provisions upon expiration thereof
PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to estab-
lish a commission to study the feasibility of establishing a bank owned
by the state of New York and report thereon within 2 years.
SUMMARY OF PROVISIONS: Section 1. Creates the New York State Commission
on Establishing a Bank Owned by New York State, known as the Commission.
This study will analyze the feasibility of establishing, a bank owned by
the State of New York or by a public authority constituted by the State
of New York.
a. The Commission should include 15 members:
(i-vi) Six are appointed by the Governor of which, one shall be a repre-
sentative of the New York State Banking Department, one shall represent
the New York State Department of Taxation and Finance and the remaining
four shall be employees of the Executive Branch and at least one must
represent the banking and financial industries, and at least one shall
represent community banking, and no more than one member may be a repre-
sentative of any financial service firm located within the State; One
shall the Comptroller, or his designee; Three shall be appointed by the
Temporary President of the Senate, one of which must be a Senator; One
shall be appointed by the Minority Leader of the Senate; Three shall be
appointed by the Speaker of the Assembly, one of which must be a member
of the Assembly; and one shall be appointed by the Minority Leader of
b. The Governor shall designate one of his/her appointees to chair the
c. The members of the Commission shall be appointed no later than ninety
days after the effective date.
Section 3. This Commission shall:
(i-ix) examine the technical, legal and financial feasibility of estab-
lishing a state-owned bank, including but not limited to the purpose of
infrastructure investments; seek participation in its deliberations from
the President of the Federal Reserve Bank of New York or the President's
designee; evaluate the experiences of other states with state-owned
banks, identifying their performances and evaluating their lending prac-
tices to determine their success in filling lending caps not filled by
the private sector; evaluate the manner in which public funds are
invested or deposited by the State and its political subdivisions
including funds managed by the State Comptroller including state and
local pension funds; examine the infrastructure investment activities
conducted by other states with state-owned banks; examine the lending
practices, including lending to support infrastructure, of the existing
public agencies in the commonwealth that perform lending service. Any
other public authority in the State that lends money shall cooperate
fully with the Commission and shall supply information reasonably
required by the Commission to carry out its charge; investigate how a
State Bank may promote the agriculture, education, community develop-
ment, economic development, commerce and industry within the State; hold
at least three public hearings; and publish its findings and recommenda-
tions in a written report no later than one year after the effective
date of this act.
Section 4. States the effective date of the law.
JUSTIFICATION: This legislation is modeled on 2010 legislation in
Connecticut that created a Task Force to examine the technical, legal,
and financial feasibility of establishing a state-owned bank for infras-
tructure purposes. The interest in exploring the feasibility of state-
owned banks has grown because of the recent national fiscal crisis
including the bank bail-outs and ongoing recession, all of which has had
a detrimental impact on every state, particularly New York.
North Dakota, escaped much of the financial crisis. Many attribute North
Dakota's sound economy to its state-owned bank. The Bank of North Dakota
(Bank) was created in 1919 with the mission of promoting agriculture,
commerce and industry in North Dakota. The State of North Dakota places
all public revenues into the Bank, which are governed by strict regu-
lations. The Bank was not established to compete with commercial or
community banks so it partners with 100 other financial institutions to
help the North Dakota citizenry. The Bank is an economic development
bank, helping large, small and medium sized businesses within the state,
It also provides student loans and special assistance to start-ups. The
Bank has emerged as a model for other states because it did not engage
in the risky financial strategies that contributed to the catastrophic
bank failures throughout the country. Many candidates for public office,
from both political parties in states such as Oregon, Illinois, Califor-
nia, Florida, Idaho, Vermont, and Washington have proposed the estab-
lishment of state-owned banks citing numerous advantages. For example,
state banks are depositories of public funds operating more conserva-
tively than for-profit banks, eschewing the riskier moneymaking schemes,
State-owned banks have a primary mission to develop the state and local
economy, investing in infrastructure and providing loans to businesses,
not to generate profits for shareholders.
This legislation creates a Commission with a broad mandate. It will
examine all aspects of a state-owned bank, including how it can promote
the agriculture, education, economic development, commerce and industry
in New York State.
PRIOR LEGISLATIVE HISTORY: A6737 of 2011/2012.
FISCAL IMPLICATIONS: Unknown at this time.
EFFECTIVE DATE: This act shall take effect immediately and shall expire
and be deemed repealed one year after such effective date.