Relates to funds of the state; prohibits certain public authorities, commissions or public benefit corporations from depositing moneys in certain banking institutions.
TITLE OF BILL: An act to amend the public authorities law, in relation to funds of the state
This bill would prohibit public authorities from depositing their moneys in a banking institution with a federal Community Reinvestment Act rating of less than satisfactory.
SUMMARY OF PROVISIONS:
Section 1 of the bill amends Article 9 of the public authorities law to specify that notwithstanding any other provision of this chapter, no public authority or public benefit corporation chartered by The State of New York shall deposit its moneys in a banking institution to which the Community Reinvestment Act of 1977, United States P.L.95-128 applies, unless such institution has received a record of performance no lower than satisfactory.
In 1977, Congress passed the Community Reinvestment Act (CRA), a law that sought to eliminate discriminatory behavior by banks. The CRA requires banks to meet the financial needs of their communities by investing in low to moderate-income neighborhoods. One of the CRA's most powerful tools to spur banks to return capital to the neighborhoods from which they extracted it, is the CRA's focus upon neighborhood lending target compliance, and enforcement against banks that fail to meet federal lending guidelines. The overall goal is to encourage banks to lend in distressed communities, and by creating such a pool of liquid funds, to increase economic development, small business and consumer lending, and homeownership.
A recent report by the Association for Neighborhood and Housing Development (ANHD) concerning New York City's 17 largest banks reveal that while deposits grew by more than $452 billion in 2007 and 2008, these institutions reduced community lending 20.2% or $560 million dollars. Furthermore, the report concludes that these banks also reduced their multi-family loans in low-income areas by nearly twenty-five percent, or $1.3 billion dollars. While this report may be no more than a window into a problem whose parameters are different outside of New York City, the dramatic declines in lending portrayed during a period of consumer credit crisis are distressing and endanger the prosperity and recovery of New York's communities.
In New York, billions of dollars are held on deposit by public authorities, commissions and public benefit corporations, and the deposit or withholding of such funds can act as a power incentive for CRA compliance. This bill would further enhance CRA compliance by directing the public authorities continued or created in New York not to deposit funds in those banks that have not received a CRA rating of satisfactory or better.
PRIOR LEGISLATIVE HISTORY:
2013-14: S.2780/A.2058 - Referred to Corporations, Authorities and Commissions 2011-12: S.2850/A.5947 - Referred to Corporations, Authorities and Commissions/Referred to Ways and Means 2009-10: S.8507/A.11713 - Referred to Rules/Referred to Corporations
FISCAL IMPACT ON THE STATE:
This act shall take effect on the one hundred-eightieth day after it shall have become law.
STATE OF NEW YORK ________________________________________________________________________ 2453 2015-2016 Regular Sessions IN SENATE January 23, 2015 ___________Introduced by Sen. PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions AN ACT to amend the public authorities law, in relation to funds of the state THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The public authorities law is amended by adding a new section 2891 to read as follows: S 2891. DEPOSITS. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAP- TER, NO PUBLIC AUTHORITY, COMMISSION OR PUBLIC BENEFIT CORPORATION CONTINUED OR CREATED BY THIS CHAPTER SHALL DEPOSIT ITS MONEYS IN A BANK- ING INSTITUTION TO WHICH THE COMMUNITY REINVESTMENT ACT OF 1977, UNITED STATES P.L. 95-128, APPLIES UNLESS SUCH INSTITUTION HAS RECEIVED A RECORD OF PERFORMANCE NO LOWER THAN SATISFACTORY AS DETERMINED UNDER SUCH ACT IN ACCORDANCE WITH SECTION TWENTY-EIGHT-B OF THE BANKING LAW. S 2. This act shall take effect on the one hundred eightieth day after it shall have become a law.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD05229-01-5