Bill S4672-2013

Allows credit unions, savings banks, savings and loan associations and federal savings associations to accept and secure deposits from municipal corporations

Allows credit unions, savings banks, savings and loan associations and federal savings associations to accept and secure deposits from municipal corporations.

Details

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  • Jan 8, 2014: REFERRED TO LOCAL GOVERNMENT
  • Apr 17, 2013: REFERRED TO LOCAL GOVERNMENT

Memo

BILL NUMBER:S4672

TITLE OF BILL: 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

PURPOSE:

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

SUMMARY:

Section 1 changes the definition of "bank" to include credit unions, or federal credit unions, savings banks and savings & loan associations.

Section 2. adds accepting deposits from a local government to the general powers of a credit union.

Section 3 requires credit unions to pledge assets or furnish other security for deposits accepted from local governments.

Section 4 removes restrictions on savings banks from accepting deposits from a local government.

Section 5 requires savings banks to pledge assets or furnish other security for deposits accepted from local governments.

Section 6 requires savings and loan associations to pledge assets or furnish other security for deposits accepted from local governments.

Section 7 sets forth the effective date of 90 days.

CURRENT LAW:

Under current law, only commercial banks and trust companies are allowed to accept municipal deposits.

JUSTIFICATION:

The current law restricting municipal deposits to commercial banks is an anachronism, stemming from the days when commercial banks were the most secure option for these types of investments. At that time, savings banks, savings & loan associations and credit unions, were smaller, less secure entities that primarily served individual investors by providing investment opportunities and offering loans, particularly mortgages to residents of the communities they served. However, savings banks, savings & loan associations and credit unions are now on par with commercial banks in many of the services they provide as well as the security they offer to their investors. Allowing savings banks, savings & loans and credit unions to accept municipal deposits would be beneficial to the communities they are serving by offering a competitive alternative to commercial banks, who are often a large corporate entity with no real affiliation or commitment to the community they serve.

LEGISLATIVE HISTORY:

A6511 of the 2007-2008 legislative session., A.4370 of the laws of 2009-2010, and A3239 of the 2011-2012 legislative session.

FISCAL IMPLICATIONS:

None to the State

EFFECTIVE DATE:

Ninety days following enactment.


Text

STATE OF NEW YORK ________________________________________________________________________ 4672 2013-2014 Regular Sessions IN SENATE April 17, 2013 ___________
Introduced by Sen. ROBACH -- 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 credit unions, savings banks, savings and loan associations and federal savings associations 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; A CREDIT UNION AS DEFINED BY THE BANKING LAW OR A FEDERAL CREDIT UNION LOCATED AND AUTHORIZED TO DO BUSINESS IN NEW YORK WHICH HAS ITS PRINCIPAL OFFICE IN A LOCATION DESCRIBED IN PARAGRAPH (A) OF SUBDI- VISION THIRTY-SEVEN OF SECTION FOUR HUNDRED FIFTY-FOUR OF THE BANKING LAW, OR A BRANCH OFFICE IN A LOCATION DESCRIBED IN PARAGRAPH (B) OF SUBDIVISION THIRTY-SEVEN OF SECTION FOUR HUNDRED FIFTY-FOUR OF THE BANK- ING LAW; OR 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. S 2. Section 454 of the banking law is amended by adding a new subdi- vision 37 to read as follows: 37. (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. S 3. The banking law is amended by adding a new section 454-a to read as follows: S 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-SEVEN 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. S 4. 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 A LOCAL GOVERNMENT, AS DEFINED IN PARAGRAPH A OF SUBDIVI- SION ONE OF SECTION TEN OF THE GENERAL MUNICIPAL LAW, MAY ACCEPT DEPOS- ITS AT SUCH PRINCIPAL OFFICE FOR CREDIT TO SUCH LOCAL GOVERNMENT. (B) A SAVINGS BANK WHICH MAINTAINS A BRANCH OFFICE WITHIN 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. S 5. Section 234 of the banking law is amended by adding a new subdi- vision 26 to read as follows: 26. 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. S 6. Section 383 of the banking law is amended by adding a new subdi- vision 17 to read as follows: 17. 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. S 7. This act shall take effect on the ninetieth day after it shall have become a law.

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