Bill S3654A-2011

Includes credit unions and federal credit unions within the definition of bank, trust company or national bank for purpose of banking development district program

Includes credit unions and federal credit unions within the definition of bank, trust company or national bank for the purpose of the banking development district program (which was created to encourage the establishment of bank branches in geographic locations where there is a demonstrated need for banking services); directs the banking board to promulgate rules and regulations to authorize the participation of credit unions and federal credit unions in such program; and provides that for purposes of such program, a credit union may include in its membership any person or organization located within a local community, neighborhood or rural district where there is a demonstrated need for banking services.

Details

Actions

  • Jan 19, 2012: PRINT NUMBER 3654A
  • Jan 19, 2012: AMEND AND RECOMMIT TO BANKS
  • Jan 4, 2012: REFERRED TO BANKS
  • Feb 28, 2011: REFERRED TO BANKS

Memo

BILL NUMBER:S3654A

TITLE OF BILL: An act to amend the banking law, in relation to including credit unions and federal credit unions within provisions regarding banking development district program and providing for the repeal of certain provisions upon expiration thereof

PURPOSE: To enable state-chartered credit unions and federal credit unions to participate in the Banking Development District Program.

SUMMARY OF PROVISIONS: Section 1 amends subdivision 5 of section 96-d of the banking law to include credit unions and federal credit unions in the Banking Development District Program.

Section 2 amends Section 451(2) of the banking law to state that, for the purposes of section 96-d of this chapter, the credit union may include in its membership any person or organization located within a local community, neighborhood or rural district where there is a demonstrated need for banking services as determined by the superintendent.

EXISTING LAW: Currently, only commercial banks, trust companies, savings banks and savings and loan associations may participate in the Program.

JUSTIFICATION: Chapter 204 of the Laws of 1997 authorized the creation of a Banking Development District Program, which enables municipalities and New York state to offer certain economic incentives to encourage the establishment of commercial bank branches in areas where there is a demonstrated need for banking services. Chapter 526 of the Laws of 1998 amended the law to allow savings banks and savings and loan associations to participate in this program.

This legislation includes credit unions within the economic development program. Credit unions will be able to offer small business services, such as member business lending, similar to those currently offered by commercial banks and thrift institutions. By enabling credit unions to participate in this program, there will be more opportunities for municipalities to work with different types of banking institutions to encourage better banking services in developing areas.

LEGISLATIVE HISTORY: S.3143 of 2005-06 S.2867A of 2007-08 S.4873 of 2009-10 S.3654 of 2011-12

FISCAL IMPLICATIONS:

If the State chooses to enter into an agreement with a particular credit union in which it would earn interest at a lower rate then the institution's posted 2-year CD rate, then the State would forgo interest income on those deposits. The State would also forgo a minimal amount of revenue by waiving the $750 application fee for establishing a branch.

LOCAL FISCAL IMPLICATIONS: If a local government chooses to enter into an agreement with a participating credit union in which it would earn interest at a lower rate than the institution's posted 2-year CD rate, then the local government would forgo interest income on those municipal funds. Because the banking development district program is intended to. spur the development of a bank facility which would not otherwise exist, any branches established by credit unions should actually result in a net increase in property tax revenue. Such increase would grow each year as the partial property tax exemption declines.

EFFECTIVE DATE: This act shall take effect immediately and shall be deemed to have been in full force and effect on or after January 1, 2012, provided however, that the amendments to subdivision 2 of section 451 of the banking law made by section two of this act shall expire and be deemed repealed on the same date as section 4 of chapter 526 of the laws of 1998.


Text

STATE OF NEW YORK ________________________________________________________________________ 3654--A 2011-2012 Regular Sessions IN SENATE February 28, 2011 ___________
Introduced by Sen. SMITH -- read twice and ordered printed, and when printed to be committed to the Committee on Banks -- recommitted to the Committee on Banks in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the banking law, in relation to including credit unions and federal credit unions within provisions regarding banking develop- ment district program and providing for the repeal of certain provisions upon expiration thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 5 of section 96-d of the banking law, as added by chapter 526 of the laws of 1998, paragraph (a) as amended by chapter 328 of the laws of 1999 and paragraph (b) as further amended by section 104 of part A of chapter 62 of the laws of 2011, is amended to read as follows: 5. (a) Notwithstanding the provisions of subdivision two of section two hundred thirty-seven of this chapter; for the purposes of this section, paragraph c of subdivision two of section ten of the general municipal law, subdivision six of section one hundred five of the state finance law and section four hundred eighty-five-f of the real property tax law, any reference to a bank, trust company or national bank shall be deemed to include a savings bank, savings and loan association, federal savings and loan association [or], federal savings bank, CREDIT UNION OR FEDERAL CREDIT UNION; provided, however, that such provisions of law do not grant a savings bank, savings and loan association, feder- al savings and loan association [or], federal savings bank, A CREDIT UNION OR A FEDERAL CREDIT UNION eligibility to accept municipal or public funds or municipal or public moneys other than for the limited purposes of the establishment of a branch in a banking development district pursuant to this section. Any such municipal or public funds or
moneys shall be deposited only at the branch established pursuant to this section, and any municipal funds or moneys may be deposited only by the sponsoring municipality in which the branch and banking development district are located; provided further that any such municipal or public funds or moneys shall be subject to the same requirements which apply to municipal or public funds or moneys deposited in a bank, trust company or national bank and shall also be subject to the provisions of section one hundred five of the state finance law or section ten of the general municipal law relating to such deposits. (b) Notwithstanding any other provision of law, the superintendent of financial services shall promulgate rules and regulations to authorize the participation of savings banks, savings and loan associations, federal savings banks [and], federal savings and loan associations, CREDIT UNIONS AND FEDERAL CREDIT UNIONS in the program established pursuant to this section. S 2. Subdivision 2 of section 451 of the banking law is amended by adding a new paragraph (c-1) to read as follows: (C-1) FOR THE PURPOSES OF SECTION NINETY-SIX-D OF THIS CHAPTER, THE CREDIT UNION MAY INCLUDE IN ITS MEMBERSHIP ANY PERSON OR ORGANIZATION LOCATED WITHIN A LOCAL COMMUNITY, NEIGHBORHOOD, OR RURAL DISTRICT WHERE THERE IS A DEMONSTRATED NEED FOR BANKING SERVICES AS DETERMINED BY THE SUPERINTENDENT. S 3. This act shall take effect immediately and shall be deemed to have been in full force and effect on and after January 1, 2012, provided, however, that the amendments to subdivision 2 of section 451 of the banking law made by section two of this act shall expire and be deemed repealed on the same date as section 4 of chapter 526 of the laws of 1998, as amended, expires and repeals, and provided, further that the amendments to subdivision 5 of section 96-d of the banking law made by section one of this act shall not affect the repeal of such subdivision and shall be deemed to be repealed therewith; provided, however, that any branch established prior to the expiration and repeal of the provisions of this act by a credit union or federal credit union in a banking development district pursuant to the provisions of this act shall continue to operate in accordance with the provisions of the bank- ing law, as amended by this act, and remain eligible for all the rights and privileges authorized by this act.

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