Relates to the maximum amount of funds which the state comptroller and the commissioner of taxation and finance may deposit and the maximum amount of funds on deposit at a community banking institution.
Ayes (33): DeFrancisco, Smith, Bonacic, Farley, Flanagan, Fuschillo, Golden, Griffo, Grisanti, Hannon, Lanza, Larkin, LaValle, Little, Marcellino, Nozzolio, O'Mara, Ranzenhofer, Robach, Savino, Seward, Young, Dilan, Rivera, Gianaris, Breslin, Parker, Peralta, Stavisky, Squadron, Kennedy, Espaillat, Sampson
Ayes W/R (3): Krueger, Montgomery, Perkins
Nays (1): Diaz
Ayes (61): Adams, Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gianaris, Gipson, Golden, Griffo, Grisanti, Hassell-Thomps, Hoylman, Kennedy, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sanders, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Excused (2): Hannon, Sampson
TITLE OF BILL: An act to amend the banking law, in relation to the community bank deposit program
PURPOSE: To permit participating banks to expand their usage of the community bank deposit program.
SUMMARY OF PROVISIONS: This bill amends subdivision 2 of section 87 of the Banking Law to cap the amount of funds which an individual bank may have on deposit to $20 million.
JUSTIFICATION: The community bank deposit program seeks to encourage the State Comptroller and the Commissioner of Taxation and Finance to consider placing State funds into local banks. This program recognizes that local banks are well-positioned to use their deposits to support economic activities in their communities. This bill seeks to expand the program to ensure additional availability of funds.
By encouraging the placement of State deposits in local banks, this program creates an opportunity for New York State to help stimulate local economic development. Currently, much of the State's funds may be placed in brokerage firms or in large banking institutions, many of which may be head quartered in another state. In either of those cases, the economic benefits of the State deposits may flow out of the state, and the resulting local economic benefit can be minimal.
In contrast, deposits in local community banks can have a significant impact within that particular community. The placement of state deposits would help enable these community banking institutions to meet the economic needs of their local communities. Because many small communities are home to small state and national banks, expanding the program would be of benefit to the economies of these small communities.
California has had a successful program for a number of years in which the State broadly deposits its funds into a large number of financial institutions and local communities. The intent of New York's law is to encourage the State to consider a similar approach by placing more of its funds in local community banks. While the Comptroller and the Commissioner are not required to make such deposits, they are encouraged to consider the benefits of such an approach. This would enhance the ability of small local banks to support the economies of their communities by making commercial loans to local businesses.
LEGISLATIVE HISTORY: 2011-12 S. 4927a Passed Senate/A. 8147a - Banks Committee.
FISCAL IMPLICATIONS: This bill would have only a minimal fiscal impact, depending on the rate of return received on any deposits placed under this program.
EFFECTIVE DATE: Immediate.
STATE OF NEW YORK ________________________________________________________________________ 2494 2013-2014 Regular Sessions IN SENATE January 17, 2013 ___________Introduced by Sen. GRIFFO -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to the community bank deposit program THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 2 of section 87 of the banking law, as amended by chapter 274 of the laws of 2007, is amended to read as follows: 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 hundred fifty million dollars each. THE MAXIMUM AMOUNT OF FUNDS ON DEPOSIT AT A COMMUNITY BANKING INSTITUTION SHALL NOT EXCEED TWENTY MILLION DOLLARS. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD07267-01-3