The New York State Senate

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7334
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                May 5, 2021
                                ___________
 
 Introduced by M. of A. PICHARDO -- read once and referred to the Commit-
   tee on Banks
 
 AN  ACT  to  amend  the  general  municipal  law and the banking law, in
   relation to allowing credit unions, savings banks,  savings  and  loan
   associations  and  federal  savings  associations to accept and secure
   deposits from municipal corporations;  to  direct  the  department  of
   financial  services  to  conduct a study and issue a report concerning
   the impact of allowing certain financial institutions to accept  local
   government  public  deposits;  and providing for the repeal of certain
   provisions upon the expiration thereof
 
   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; A SAVINGS BANK AS DEFINED BY THE BANKING LAW,  A  SAVINGS  AND
 LOAN  ASSOCIATION  AS  DEFINED  BY  THE BANKING LAW OR A FEDERAL SAVINGS
 ASSOCIATION LOCATED AND AUTHORIZED TO DO BUSINESS IN NEW YORK WHICH  HAS
 ITS  PRINCIPAL OFFICE IN A LOCATION DESCRIBED IN PARAGRAPH (A) OF SUBDI-
 VISION TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF THE BANKING LAW, OR  A
 BRANCH  OFFICE  IN  A LOCATION DESCRIBED IN PARAGRAPH (B) OF SUBDIVISION
 TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF THE BANKING LAW.
   § 2. Section 10 of the general municipal law is amended  by  adding  a
 new subdivision 5 to read as follows:
   5.  IN  ADDITION  TO  THE  FINANCIAL INSTITUTIONS AUTHORIZED TO ACCEPT
 PUBLIC DEPOSITS IN SUBDIVISION TWO OF THIS SECTION,  CREDIT  UNIONS,  AS
 DEFINED BY THE BANKING LAW OR A FEDERAL CREDIT UNION LOCATED AND AUTHOR-
 IZED  TO  DO  BUSINESS  IN  NEW YORK WHICH HAS ITS PRINCIPAL OFFICE IN A
 LOCATION DESCRIBED IN  PARAGRAPH  (A)  OF  SUBDIVISION  THIRTY-EIGHT  OF
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD05504-01-1

 A. 7334                             2
 
 SECTION  FOUR  HUNDRED FIFTY-FOUR OF THE BANKING LAW, OR A BRANCH OFFICE
 IN A LOCATION DESCRIBED IN PARAGRAPH (B) OF SUBDIVISION THIRTY-EIGHT  OF
 SECTION  FOUR  HUNDRED  FIFTY-FOUR OF THE BANKING LAW, MAY ACCEPT PUBLIC
 DEPOSITS  BY  A  LOCAL  GOVERNMENT  SUBJECT TO THE LIMITATIONS SET FORTH
 HEREIN. FOR THE CALENDAR YEAR  BEGINNING  JANUARY  FIRST,  TWO  THOUSAND
 TWENTY-TWO,  THE GOVERNING BOARD OF A LOCAL GOVERNMENT MAY DESIGNATE ONE
 OR MORE CREDIT UNIONS, FOR THE DEPOSIT OF PUBLIC FUNDS IN AN AMOUNT  NOT
 TO  EXCEED  FIVE  HUNDRED THOUSAND DOLLARS IN EACH INSTITUTION.  FOR THE
 CALENDAR YEAR BEGINNING JANUARY FIRST, TWO  THOUSAND  TWENTY-THREE,  THE
 GOVERNING  BOARD  OF A LOCAL GOVERNMENT MAY DESIGNATE ONE OR MORE CREDIT
 UNIONS FOR THE DEPOSIT OF PUBLIC FUNDS IN AN AMOUNT NOT  TO  EXCEED  ONE
 MILLION  DOLLARS  IN  EACH  INSTITUTION. FOR THE CALENDAR YEAR BEGINNING
 JANUARY FIRST, TWO THOUSAND TWENTY-FOUR, THE GOVERNING BOARD OF A  LOCAL
 GOVERNMENT  MAY  DESIGNATE  ONE OR MORE CREDIT UNIONS FOR THE DEPOSIT OF
 PUBLIC FUNDS IN AN AMOUNT NOT TO EXCEED  TWO  MILLION  DOLLARS  IN  EACH
 INSTITUTION.    FOR THE CALENDAR YEAR BEGINNING JANUARY FIRST, TWO THOU-
 SAND TWENTY-FIVE, THE GOVERNING BOARD OF A LOCAL GOVERNMENT  MAY  DESIG-
 NATE  ONE  OR  MORE  CREDIT UNIONS FOR THE DEPOSIT OF PUBLIC FUNDS IN AN
 AMOUNT NOT TO EXCEED THREE MILLION DOLLARS IN EACH INSTITUTION. FOR  THE
 CALENDAR  YEAR  BEGINNING  JANUARY  FIRST,  TWO THOUSAND TWENTY-SIX, THE
 GOVERNING BOARD OF A LOCAL GOVERNMENT MAY DESIGNATE ONE OR  MORE  CREDIT
 UNIONS  FOR  THE DEPOSIT OF PUBLIC FUNDS IN AN AMOUNT NOT TO EXCEED FOUR
 MILLION DOLLARS IN EACH INSTITUTION. FOR  THE  CALENDAR  YEAR  BEGINNING
 JANUARY FIRST, TWO THOUSAND TWENTY-SEVEN, THE GOVERNING BOARD OF A LOCAL
 GOVERNMENT  MAY  DESIGNATE  ONE OR MORE CREDIT UNIONS FOR THE DEPOSIT OF
 PUBLIC FUNDS IN AN AMOUNT NOT TO EXCEED FIVE  MILLION  DOLLARS  IN  EACH
 INSTITUTION.  FOR  THE  PURPOSES  OF THIS SECTION, A DEPOSIT LIMIT SHALL
 MEAN THE MAXIMUM AMOUNT OF ALL FUNDS OF A LOCAL GOVERNMENT IN AN  INSTI-
 TUTION BASED ON A DAILY ACCOUNT BALANCE EXCLUDING ANY ACCRUED INTEREST.
   §  3. Section 454 of the banking law is amended by adding a new subdi-
 vision 38 to read as follows:
   38. (A) 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, AT ITS PRINCIPAL OFFICE WHERE SUCH CREDIT UNION MAINTAINS
 ITS PRINCIPAL OFFICE WITHIN THE JURISDICTION OF SUCH LOCAL GOVERNMENT.
   (B) 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,  AT  ITS  BRANCH  OFFICE WHERE SUCH CREDIT UNION MAINTAINS A BRANCH
 OFFICE WITHIN THE JURISDICTION OF SUCH LOCAL GOVERNMENT.
   § 4. The banking law is amended by adding a new section 454-a to  read
 as follows:
   §  454-A.  DEPOSITS  OF  PUBLIC MONEY WITH CREDIT UNIONS; SECURITY.  A
 CREDIT UNION MAY ACCEPT DEPOSITS OF PUBLIC MONEY SUBJECT TO THE  LIMITA-
 TIONS  PROVIDED  IN  SUBDIVISION  THIRTY-EIGHT  OF  SECTION FOUR HUNDRED
 FIFTY-FOUR OF THIS ARTICLE. 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.
   § 5. The banking law is amended by adding a new section 454-b to  read
 as follows:
   §  454-B. COMMUNITY INVESTMENT BY CREDIT UNION; CONDITION OF ACCEPTING
 MUNICIPAL DEPOSITS.  1. IF THE AVERAGE DAILY BALANCE  OF  THE  MUNICIPAL
 FUNDS ON DEPOSIT AT THE CREDIT UNION FOR THE PRECEDING YEAR IS IN EXCESS
 OF  THREE  HUNDRED THOUSAND DOLLARS, THE CHIEF FINANCIAL OFFICER, OR THE
 SENIOR OFFICIAL IN THE CREDIT UNION WITH RESPONSIBILITY  FOR  PERFORMING
 THE FUNCTIONS OF A CHIEF FINANCIAL OFFICER OF A CREDIT UNION THAT CHOOS-

 A. 7334                             3

 ES  TO  ACCEPT MUNICIPAL DEPOSITS PURSUANT TO SECTION TEN OF THE GENERAL
 MUNICIPAL LAW, SHALL, CONSISTENT WITH SAFETY AND SOUNDNESS, TRANSMIT  TO
 THE  DEPARTMENT  BY  DECEMBER  THIRTY-FIRST EACH YEAR, A WRITTEN CERTIF-
 ICATION,  IN  A  FORM  SPECIFIED BY THE SUPERINTENDENT AND POSTED ON THE
 DEPARTMENT'S WEBSITE, THAT THE CREDIT UNION HAS INVESTED INTO THE COMMU-
 NITY, PURSUANT TO THIS  SECTION,  A  SUM  EQUAL  TO  THE  AVERAGE  DAILY
 BALANCE,  MULTIPLIED  BY  A  FACTOR  OF  .0035, PROVIDED, HOWEVER, IN NO
 EVENT, SHALL A CREDIT UNION BE REQUIRED TO CONTRIBUTE A SUM IN EXCESS OF
 ONE HUNDRED THOUSAND DOLLARS IN ANY ONE YEAR.
   2. THE COMMUNITY INVESTMENT  DESCRIBED  IN  SUBDIVISION  ONE  OF  THIS
 SECTION  SHALL  BE  USED  TO  SUPPORT  ANY OF THE FOLLOWING PURPOSES, AS
 DETERMINED BY THE CREDIT UNION, IN ANY COMMUNITY WHERE SUCH CREDIT UNION
 HAS AUTHORITY TO PROVIDE  SERVICES,  PROVIDED  THE  CREDIT  UNION  SHALL
 PRIORITIZE LOW-INCOME COMMUNITIES WHEN CHOOSING WHERE TO INVEST:
   (A) MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISES IN THE COMMUNITY; OR
   (B) AFFORDABLE HOUSING (INCLUDING MULTIFAMILY RENTAL HOUSING) FOR LOW-
 AND MODERATE-INCOME INDIVIDUALS IN THE COMMUNITY; OR
   (C)  COMMUNITY  SERVICES TARGETED TO LOW- AND MODERATE-INCOME INDIVID-
 UALS IN THE COMMUNITY; OR
   (D) ACTIVITIES THAT REVITALIZE OR STABILIZE  THE  COMMUNITY  INCLUDING
 LOW- OR MODERATE-INCOME GEOGRAPHIES, OR DESIGNATED DISASTER AREAS; OR
   (E) FINANCIAL LITERACY.
   3.  FOR  PURPOSES  OF  THE  COMMUNITY INVESTMENT PURSUANT TO THIS THIS
 SECTION, FIELD OF MEMBERSHIP RESTRICTIONS SHALL NOT APPLY.
   § 6. 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)  A  SAVINGS  BANK  WHICH MAINTAINS ITS PRINCIPAL
 OFFICE WITHIN THE JURISDICTION OF A  LOCAL  GOVERNMENT,  AS  DEFINED  IN
 PARAGRAPH  A  OF SUBDIVISION ONE OF SECTION TEN OF THE GENERAL MUNICIPAL
 LAW, MAY ACCEPT DEPOSITS AT SUCH PRINCIPAL OFFICE  FOR  CREDIT  TO  SUCH
 LOCAL GOVERNMENT.
   (B)  A  SAVINGS BANK WHICH MAINTAINS A BRANCH OFFICE WITHIN THE JURIS-
 DICTION OF A LOCAL GOVERNMENT, AS DEFINED IN PARAGRAPH A OF  SUBDIVISION
 ONE  OF SECTION TEN OF THE GENERAL MUNICIPAL LAW, MAY ACCEPT DEPOSITS AT
 SUCH BRANCH OFFICE FOR CREDIT TO SUCH LOCAL GOVERNMENT.
   § 7. 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.
   § 8. 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.
   § 9. 1. The department of financial services is hereby authorized  and
 directed  to  study  and  issue  a  public  report with recommendations,
 concerning the impact of allowing credit unions, savings banks,  savings
 and  loan  associations  or federal savings associations to accept local

 A. 7334                             4
 
 government public deposits. This report shall be prepared  in  consulta-
 tion  with  stakeholders,  including  local  governments,  banks, credit
 unions, savings banks, savings and loan associations and federal savings
 associations.
   2.  On  or  before  January  1,  2027, the superintendent of financial
 services shall submit to the governor, the temporary  president  of  the
 senate,  the  speaker  of the assembly, the chair of the senate standing
 committee on banks, and the chair of the assembly standing committee  on
 banks,  a  written  report detailing the findings and recommendations on
 the department's study performed in accordance with subdivision  one  of
 this section. The superintendent shall use reasonable efforts to identi-
 fy  any  impacts  by  expanding  the  financial institutions eligible to
 accept municipal deposits and shall include the following information in
 the report:
   (a) An analysis of deposits held in banks including the  size  of  the
 bank's  assets,  location of banks, type of bank charter, changes in the
 amount of commercial bank held deposits from the effective date of  this
 act and overall impact on banking industry, in particular small communi-
 ty banks.
   (b)  The  growth  of municipal deposits held in credit unions, savings
 banks, savings and loan associations  or  federal  savings  associations
 after the effective date of this act.
   §  10. Section 86 of the banking law, as amended by chapter 274 of the
 laws of 2007, is amended to read as follows:
   § 86. Eligibility. 1. FOR THE  PURPOSES  OF  THIS  ARTICLE,  THE  TERM
 "COMMUNITY BANK INSTITUTION" SHALL MEAN ANY STATE OR FEDERALLY CHARTERED
 BANKING  INSTITUTION  AND SHALL INCLUDE ANY BANK, TRUST COMPANY, SAVINGS
 BANK OR SAVINGS AND LOAN ASSOCIATION WITH LESS THAN TEN BILLION  DOLLARS
 IN  ASSETS  THAT  IS  HEADQUARTERED  IN THIS STATE AND WHOSE PREDOMINANT
 RETAIL AND COMMERCIAL BANKING OPERATIONS SERVE RESIDENTS AND  BUSINESSES
 OF  THIS  STATE,  AS DETERMINED BY THE SUPERINTENDENT IN HIS OR HER SOLE
 DISCRETION AND PURSUANT TO SUCH RULES AND REGULATIONS AS THE SUPERINTEN-
 DENT DEEMS NECESSARY TO IMPLEMENT AND ADMINISTER THESE PROVISIONS.
   2. To be eligible to receive deposits, or to renew  existing  deposits
 under  this program[, a bank, trust company, savings bank or savings and
 loan association: (a) must be chartered under  the  provisions  of  this
 chapter and (b)] A COMMUNITY BANK INSTITUTION:
   (A)  must  have  a  current  CRA rating of satisfactory or better. The
 superintendent shall, if requested  by  the  state  comptroller  or  the
 commissioner of taxation and finance, confirm whether a particular bank-
 ing institution meets the criteria specified in this section; AND
   (B)  MEET  ANY  ADDITIONAL CRITERIA ESTABLISHED BY THE COMPTROLLER AND
 THE COMMISSIONER OF TAXATION AND FINANCE TO  DETERMINE  ELIGIBILITY  FOR
 PARTICIPATION IN THE PROGRAM. SUCH CRITERIA MAY INCLUDE AN INSTITUTION'S
 LOAN  TO  DEPOSIT  RATIO,  ITS RECORD OF SMALL BUSINESS LENDING, AND THE
 IMPACT SUCH DEPOSITS WOULD HAVE ON AN AREA'S ECONOMIC ACTIVITY.
   [2. A federal bank, trust company, savings bank or  savings  and  loan
 association may also be eligible to receive deposits, or to renew exist-
 ing deposits, under this program if: (a) its principal office is located
 in  this  state;  (b)  it  has  a  current CRA rating of satisfactory or
 better; and (c) it meets any  additional  criteria  established  by  the
 comptroller  and  the  commissioner of taxation and finance to determine
 eligibility for participation in the program. Such criteria may  include
 an  institution's  loan  to  deposit ratio, its record of small business
 lending, and the impact such deposits would have on an  area's  economic
 activity.]

 A. 7334                             5

   §  11. Section 87 of the banking law, as amended by chapter 274 of the
 laws of 2007, subdivision 2 as amended by chapter 495  of  the  laws  of
 2013, is amended to read as follows:
   §  87.  Deposits.  1.  Notwithstanding  any  provisions  of law to the
 contrary, the state comptroller and the  commissioner  of  taxation  and
 finance  shall,  for  the purposes of administering moneys in accordance
 with the provisions of sections ninety-eight-a and one hundred  five  of
 the state finance law, give consideration to depositing funds into those
 community  banking  institutions  which  are  deemed eligible to receive
 deposits pursuant to section eighty-six of this article.
   2. The maximum amount of funds which the  state  comptroller  and  the
 commissioner  of  taxation  and  finance  may deposit under this program
 shall not exceed [two] THREE hundred [fifty] million dollars each.  [The
 maximum  amount  of  funds on deposit at a community banking institution
 shall not exceed twenty million dollars.]
   3. Notwithstanding any provision of law to the contrary, any  deposits
 made pursuant to this article shall be made at rates, and for such peri-
 ods of time, as may be agreed to by the state comptroller or the commis-
 sioner of taxation and finance and the eligible community banking insti-
 tution.
   4.  Any  deposits  made  pursuant to this article may be secured by an
 irrevocable letter of credit issued by a federal home loan bank.
   5. THE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE  SHALL
 ANNUALLY  SUBMIT A JOINT REPORT TO THE GOVERNOR, THE TEMPORARY PRESIDENT
 OF THE SENATE, THE SPEAKER OF THE ASSEMBLY,  THE  CHAIR  OF  THE  SENATE
 FINANCE  COMMITTEE,  THE CHAIR OF THE ASSEMBLY WAYS AND MEANS COMMITTEE,
 THE CHAIR OF THE SENATE STANDING COMMITTEE ON BANKS, AND  THE  CHAIR  OF
 THE ASSEMBLY STANDING COMMITTEE ON BANKS ON THE EFFICACY OF THE COMMUNI-
 TY  BANK  DEPOSIT PROGRAM, INCLUDING INFORMATION ON THE NUMBER OF QUALI-
 FIED COMMUNITY BANKING INSTITUTIONS, THE  NUMBER  OF  COMMUNITY  BANKING
 INSTITUTIONS  WHICH HAVE RECEIVED DEPOSITS, THE SIZE OF EACH PARTICIPAT-
 ING COMMUNITY BANK, THE NUMBER AND  AMOUNT  OF  SUCH  DEPOSITS  AND  THE
 PERCENTAGE  OF  TOTAL  STATE  FUNDS DEPOSITED IN SUCH INSTITUTIONS UNDER
 THIS PROGRAM.
   § 12. No municipal deposits held in credit unions by local governments
 on December 31, 2027 shall be required to be withdrawn upon the  expira-
 tion of this act.
   §  13.  This act shall take effect on the ninetieth day after it shall
 have become a law; provided that sections two,  three,  four,  five  and
 nine of this act shall expire and be deemed repealed December 31, 2027.