NY State Senate Bill 2019-S5806

Senate Bill S5806

2019-2020 Legislative Session

Relates to allowing certain entities to accept and secure deposits from municipal corporations

download bill text pdf

Archive: Last Bill Status - In Senate Committee Local Government 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
Jan 08, 2020	referred to local government
May 15, 2019	referred to local government

2019-S5806 (ACTIVE) - Details

Current Committee:: Senate Local Government
Law Section:: General Municipal Law
Laws Affected:: Amd §10, Gen Muni L; amd §§454, 237, 234 & 383, Bank L

2019-S5806 (ACTIVE) - Summary

Relates to allowing credit unions, savings banks, savings and loan associations, national banks, federal savings associations, federal credit unions, and out-of-state banks to accept and secure deposits from municipal corporations.

2019-S5806 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5806

SPONSOR: MAYER
 
TITLE OF BILL:  An act to amend the general municipal law and the
banking law, in relation to allowing certain entities to accept and
secure deposits from municipal corporations

 
PURPOSE OR GENERAL IDEA OF BILL:

To allow savings banks, savings and loan associations and credit unions
to accept deposits from municipalities.

 
SUMMARY OF PROVISIONS:

Section 1 amends paragraph d of subdivision 1 of section 10 of the
general municipal law, as amended by chapter 623 of the laws of 1998, to
include in the definition of "Bank", savings bank, savings and loan
association, credit union, national bank, federal savings association,
federal credit union, or out-of-state bank, provided such banking enti-
ties have a principal or branch office in this state and are insured by
the either the Federal Deposit Insurance Corporation or the National

Credit Union Share Insurance Fund (or any successors to the Federal
Deposit Insurance Corporation or the National Credit Union Share Insur-
ance Fund).

Section 2 adds a new subdivision 38 to section 454 of the banking law to
provide credit unions with the power to accept deposits for credit to a
local government.

Section 3 removes restrictions on savings banks' acceptance of deposits
from local governments.

Section 4 adds a new subdivision 27 to section 234 of the banking law to
provide savings banks with the power to pledge assets or furnish other
security for deposits accepted from local governments.

Section 5 adds a new subdivision 18 to section 383 of the banking law to
provide savings and loan associations with the power to pledge assets or
furnish other security for deposits accepted from local governments.

Section 6 sets an effective date.

 
JUSTIFICATION:

Municipalities are currently restricted in their banking activities to
engaging commercial banks. The primary reason for this is that, histor-
ically, there were fewer choices. Savings banks and savings & loan asso-
ciations were less secure entities that primarily served individuals,
and credit unions were not yet in existence when current law was
enacted. Over time, savings banks, savings & loan associations, and
credit unions have exhibited growth and sophistication significant that
is comparable to larger commercial banks in terms of both service and
security, including with respect to banking products used by munici-
palities. Allowing savings banks, savings & loans associations, and
credit unions to accept municipal deposits would remove outdated
restrictions and provide communities with local, competitive alterna-
tives to national commercial banks.

 
PRIOR LEGISLATIVE HISTORY:
New bill.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.

2019-S5806 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5806
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 15, 2019
                                ___________
 
 Introduced  by  Sen.  MAYER  -- 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  banking  law,  in
   relation  to  allowing  certain entities 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 d 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:
   d. "Bank" shall mean a bank  as  defined  by  the  banking  law  or  a
 national  banking  association  located and authorized to do business in
 New York; OR A SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION,
 NATIONAL BANK, FEDERAL SAVINGS ASSOCIATION,  FEDERAL  CREDIT  UNION,  OR
 OUT-OF-STATE BANK, AS SUCH TERMS ARE DEFINED IN THE BANKING LAW, IN EACH
 CASE  HAVING  A  PRINCIPAL OR BRANCH OFFICE IN THIS STATE AND INSURED BY
 THE FEDERAL DEPOSIT INSURANCE CORPORATION,  THE  NATIONAL  CREDIT  UNION
 SHARE  INSURANCE  FUND,  OR A SUCCESSOR TO THE FEDERAL DEPOSIT INSURANCE
 CORPORATION OR THE NATIONAL CREDIT UNION SHARE INSURANCE FUND.
   § 2. Section 454 of the banking law is amended by adding a new  subdi-
 vision 38 to read as follows:
   38. TO ACCEPT DEPOSITS FOR CREDIT TO A LOCAL GOVERNMENT, AS DEFINED IN
 PARAGRAPH  A  OF SUBDIVISION ONE OF SECTION TEN OF THE GENERAL MUNICIPAL
 LAW PROVIDED THAT SUCH CREDIT UNION SHALL PLEDGE ASSETS OR FURNISH OTHER
 SECURITY SATISFACTORY IN FORM AND  AMOUNT  TO  THE  DEPOSITOR,  FOR  THE
 REPAYMENT OF MONIES HELD IN THE NAME OF SUCH DEPOSITOR, WHEN REQUIRED TO
 BE SECURED BY APPLICABLE LAW, DECREE OR REGULATION.
   §  3.  Subdivision  2 of section 237 of the banking law, as amended by
 chapter 360 of the laws of 1984, is amended to read as follows:
   2. [No savings bank shall accept any deposit for credit to any munici-
 pal corporation] A SAVINGS BANK MAY ACCEPT DEPOSITS FOR  CREDIT  TO  ANY
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD11282-03-9

 S. 5806                             2
 
 MUNICIPAL  CORPORATION,  PROVIDED  THAT  SUCH  SAVINGS BANK SHALL PLEDGE
 ASSETS OR FURNISH OTHER SECURITY SATISFACTORY IN FORM AND AMOUNT TO  THE
 DEPOSITOR,  FOR  THE REPAYMENT OF MONIES HELD IN THE NAME OF SUCH DEPOS-
 ITOR,  WHEN  REQUIRED  TO  BE SECURED BY APPLICABLE LAW, DECREE OR REGU-
 LATION.
   § 4. Section 234 of the banking law is amended by adding a new  subdi-
 vision 27 to read as follows:
   27. PURSUANT TO SUBDIVISION TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF
 THIS ARTICLE, TO PLEDGE ASSETS OR FURNISH OTHER SECURITY SATISFACTORY IN
 FORM  AND  AMOUNT  TO THE DEPOSITOR, FOR THE REPAYMENT OF MONIES HELD IN
 THE NAME OF SUCH DEPOSITOR, WHEN REQUIRED TO BE  SECURED  BY  APPLICABLE
 LAW,  DECREE  OR  REGULATION  AND  TO  EXERCISE  THE POWERS CONTAINED IN
 SECTION NINETY-SIX-B OF THIS CHAPTER.
   § 5. Section 383 of the banking law is amended by adding a new  subdi-
 vision 18 to read as follows:
   18. PURSUANT TO SUBDIVISION TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF
 THIS CHAPTER, TO PLEDGE ASSETS OR FURNISH OTHER SECURITY SATISFACTORY IN
 FORM  AND  AMOUNT  TO THE DEPOSITOR, FOR THE REPAYMENT OF MONIES HELD IN
 THE NAME OF SUCH DEPOSITOR, WHEN REQUIRED TO BE  SECURED  BY  APPLICABLE
 LAW,  DECREE  OR  REGULATION  AND  TO  EXERCISE  THE POWERS CONTAINED IN
 SECTION NINETY-SIX-B OF THIS CHAPTER.
   § 6. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.

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