S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9423
 
                           I N  A S S E M B L Y
 
                              March 14, 2024
                                ___________
 
 Introduced by M. of A. TAYLOR -- Multi-Sponsored by -- M. of A. DeSTEFA-
   NO -- read once and referred to the Committee on Banks
 
 AN  ACT  to  amend  the  general  municipal  law and the banking law, in
   relation to the establishment of a  savings  bank,  savings  and  loan
   association  or  credit  union municipal deposit program, and limiting
   deposits of public funds in such institutions  to  two  hundred  fifty
   thousand dollars
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph c 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:
   c.  "Public  deposits"  shall mean deposits of public funds in a bank,
 SAVINGS BANK, SAVINGS AND  LOAN  ASSOCIATION,  CREDIT  UNION,  or  trust
 company  which  are  available  for  all uses generally permitted by the
 bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, or trust
 company to the depositing local  government  for  actually  and  finally
 collected funds under the bank's, SAVINGS BANK'S, SAVINGS AND LOAN ASSO-
 CIATION'S, CREDIT UNION'S, or trust company's account agreement or poli-
 cies.
   §  2.    Paragraphs  f,  g and h of subdivision 1 of section 10 of the
 general municipal law are relettered paragraphs g, h and i and three new
 paragraphs f, j and k are added to read as follows:
   F. "CREDIT UNION" SHALL MEAN A STATE-CHARTERED CREDIT UNION AS DEFINED
 BY SUBDIVISION NINE OF SECTION TWO OF THE BANKING LAW  OR  A  FEDERALLY-
 CHARTERED  CREDIT  UNION  AS  DEFINED  BY  THE FEDERAL CREDIT UNION ACT,
 LOCATED AND AUTHORIZED TO DO BUSINESS IN NEW YORK.
   J. "SAVINGS BANK" SHALL MEAN A SAVINGS BANK AS DEFINED BY  SUBDIVISION
 FOUR OF SECTION TWO OF THE BANKING LAW OR ANY FEDERAL SAVINGS BANK.
   K.  "SAVINGS AND LOAN ASSOCIATION" SHALL MEAN A SAVINGS AND LOAN ASSO-
 CIATION AS DEFINED BY SUBDIVISION EIGHT OF SECTION TWO  OF  THE  BANKING
 LAW OR ANY FEDERAL SAVINGS AND LOAN ASSOCIATION.
   §  3. Subdivisions 2 and 4 of section 10 of the general municipal law,
 as amended by chapter 623 of the laws of 1998, paragraph a  of  subdivi-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07565-01-3
 A. 9423                             2
 
 sion  2 as amended by chapter 128 of the laws of 2012 and paragraph c of
 subdivision 2 and paragraph (e) of subdivision 4 as further  amended  by
 section  104 of part A of chapter 62 of the laws of 2011, are amended to
 read as follows:
   2.  a.  (i) The governing board of every local government shall desig-
 nate one or more banks, SAVINGS BANKS, SAVINGS  AND  LOAN  ASSOCIATIONS,
 CREDIT  UNIONS  or  trust companies for the deposit of public funds, the
 disposition of which is not otherwise provided for by law,  received  by
 the  chief fiscal officer or any other officer authorized by law to make
 deposits. Such designation shall be by resolution of the governing board
 or, in the case of a city, such other  body  as  may  be  authorized  or
 required by law to designate depositaries. Such resolution shall specify
 the maximum amount which may be kept on deposit at any time in each such
 bank,  SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust
 company. Such designations and amounts may be changed  at  any  time  by
 further resolution.
   (ii) The governing board of a local government that has designated one
 or  more banks or trust companies for the deposit of public funds pursu-
 ant to subparagraph (i)  of  this  paragraph  may,  in  its  discretion,
 authorize  the designated bank or trust company to arrange for the rede-
 posit of the local government's funds in  one  or  more  banking  insti-
 tutions,  as  defined  in  section  nine-r  of  the banking law, for the
 account of the local government, through  a  deposit  placement  program
 that meets all of the following conditions:
   (A)  On  or  after  the  date  that  the  local government's funds are
 received, the designated bank or trust  company  (I)  arranges  for  the
 redeposit  of  such  funds  into deposit accounts in one or more banking
 institutions and (II) serves as custodian for the local government  with
 respect to the funds redeposited into such accounts.
   (B)  Local  government  funds  deposited in a designated bank or trust
 company in accordance with this subparagraph and held in the  designated
 bank  or  trust  company  in excess of the amount insured by the federal
 deposit insurance corporation pending redeposit of the funds pursuant to
 this subparagraph shall be secured in accordance with subdivision  three
 of this section.
   (C)  The  full  amount  of  local  government funds redeposited by the
 designated bank or trust company into deposit accounts in banking insti-
 tutions pursuant to this subparagraph (plus accrued  interest,  if  any)
 shall be insured by the federal deposit insurance corporation.
   (D)  At  the same time that the money of the local government is rede-
 posited pursuant to this subparagraph, the selected depository  receives
 an  amount  of  deposits  from customers of other financial institutions
 pursuant to the deposit placement program that are at least equal to the
 amount of the local government's funds  redeposited  by  the  designated
 bank  or  trust company.   THE GOVERNING BOARD OF EVERY LOCAL GOVERNMENT
 SHALL FORWARD A COPY OF SUCH RESOLUTION TO THE OFFICE OF THE STATE COMP-
 TROLLER WHO SHALL RETAIN SUCH COPY UNTIL SUCH RESOLUTION IS  AMENDED  OR
 DISSOLVED.  A  COPY  OF  SUCH  RESOLUTION SHALL BE RETAINED BY THE STATE
 COMPTROLLER FOR RECORD KEEPING PURPOSES ONLY.
   b. PUBLIC FUNDS DEPOSITED INTO A SAVINGS BANK, FEDERAL  SAVINGS  BANK,
 CREDIT  UNION,  FEDERAL  CREDIT  UNION,  SAVINGS AND LOAN ASSOCIATION OR
 FEDERAL SAVINGS AND LOAN ASSOCIATION SHALL BE  LIMITED  TO  TWO  HUNDRED
 FIFTY THOUSAND DOLLARS.
   C.  Except as otherwise provided by law, all deposits shall be made to
 the credit of the local government.  The deposit of public funds  pursu-
 ant to this subdivision shall release the officer making the deposit and
 A. 9423                             3
 
 his  or  her  surety from any liability for loss of such public funds by
 reason of the default or insolvency of  any  such  bank,  SAVINGS  BANK,
 SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company.
   [c.]  D. The governing board of a local government, in which a banking
 development district has been designated by the superintendent of finan-
 cial services pursuant to section ninety-six-d of the banking  law,  may
 designate  a  bank,  trust  company  or  national  bank  located in such
 district for the deposit of public funds, the disposition  of  which  is
 not  otherwise provided for by law, received by the chief fiscal officer
 or other officer authorized by law to make such  deposits.  Such  desig-
 nation  shall be by resolution of the governing board or, in the case of
 a city, such other body as may be  authorized  or  required  by  law  to
 designate depositories. Such resolution shall specify the maximum amount
 which  may  be kept on deposit at any time with such bank, trust company
 or national bank located in  such  district.  Subject  to  an  agreement
 between  such governing board and such banking institution, public funds
 deposited in such banking institution may earn  a  fixed  interest  rate
 which  is at or below such banking institution's posted two year certif-
 icate of deposit rate. In those instances where there is such an  agree-
 ment,  its  terms  and  conditions shall also be specified in the resol-
 ution. Any such designation, amount,  or  agreement  provisions  may  be
 changed at any time by further resolution.
   4. (a) Notwithstanding any other provision of law to the contrary, the
 chief  fiscal officer, or other officer authorized by law to make depos-
 its, may, subject to the approval of  the  governing  body  of  a  local
 government,  by resolution, enter into a contract with a courier service
 for the purpose of causing the deposit of  public  funds  with  a  bank,
 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
 ny as provided in this section.
   (b)  The  entrusting of public funds for deposit pursuant to paragraph
 (a) of this subdivision shall release the officer entrusting the  public
 funds  to  the  courier service and his or her surety from any liability
 for loss of such public funds by the courier service in the  process  of
 delivering  such  public  funds  to  the  designated bank, SAVINGS BANK,
 SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company.
   (c) The local government authorizing the deposit of public funds by  a
 courier  service  pursuant  to  paragraph  (a) of this subdivision shall
 require the courier service to obtain a surety bond for the full  amount
 entrusted  to  the courier, payable to the local government and executed
 by an insurance company authorized to do business  in  this  state,  the
 claims  paying  ability of which is rated in the highest rating category
 by at least two nationally recognized statistical rating  organizations,
 to  insure  against  any  loss  of public funds entrusted to the courier
 service for deposit or failure to deposit the full amount  entrusted  to
 the courier.
   (d)  A deposit made by a courier on behalf of a local government shall
 be deemed to be a deposit made by the  chief  fiscal  officer  or  other
 officer entrusting such funds for purposes of the requirements contained
 in this section for securing public deposits.
   (e)  A  bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION
 or trust company may, from time to time and as agreed upon with a  local
 government, reimburse all or part of, but not more than, the actual cost
 incurred  by  the  local  government  in  transporting  cash, negotiable
 instruments or other items for deposit through a  courier  service.  Any
 such  reimbursement  agreement  shall  apply only to a specified deposit
 transaction, and may be subject to such terms,  conditions  and  limita-
 A. 9423                             4
 
 tions  as  the  bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT
 UNION or trust company deems necessary to  ensure  sound  banking  prac-
 tices,  including,  but not limited to, any terms, conditions or limita-
 tions  that  may  be required by the department of financial services or
 other federal or state authority.
   § 4. Subdivision 2 of section 11 of  the  general  municipal  law,  as
 amended  by  chapter  128  of  the  laws  of 2012, is amended to read as
 follows:
   2. a. The governing board of any local government or, if the governing
 board so delegates, the chief fiscal officer  or  other  officer  having
 custody  of  the  moneys  may temporarily invest moneys not required for
 immediate expenditure, except moneys the investment of which  is  other-
 wise  provided  for by law, either: (1) in special time INTEREST-BEARING
 deposit accounts in, or certificates  of  deposit  issued  by,  a  bank,
 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, OR SHARE CERTIFICATES ISSUED
 BY A CREDIT UNION or trust company located and authorized to do business
 in  this  state;  or  (2) in accordance with all of the following condi-
 tions:
   (i) the moneys are invested through a bank or  trust  company  located
 and authorized to do business in this state;
   (ii)  the bank or trust company arranges for the deposit of the moneys
 in certificates of deposit OR SHARE CERTIFICATES in one or more  banking
 institutions,  as  defined in section nine-r of the banking law, for the
 account of the local government;
   (iii) the full amount of principal and accrued interest of  each  such
 certificate  of  deposit  OR  SHARE  CERTIFICATE  must be insured by the
 federal deposit insurance corporation;
   (iv) the bank or trust company acts as custodian for the local govern-
 ment with respect to such certificates of deposit issued for  the  local
 government's account; and
   (v)  at the same time that the local government's moneys are deposited
 and the certificates of deposit OR SHARE CERTIFICATES are issued for the
 account of the local government, the bank or trust company  receives  an
 amount  of deposits from customers of other financial institutions equal
 to or greater than the amount  of  the  moneys  invested  by  the  local
 government through the bank or trust company.
   b.  For  any  investment made pursuant to paragraph a of this subdivi-
 sion, such time deposit account  or  certificate  of  deposit  OR  SHARE
 CERTIFICATES  shall be payable within such time as the proceeds shall be
 needed to meet expenditures for which  such  moneys  were  obtained  and
 provided further that such time deposit account or certificate of depos-
 it  OR  SHARE  CERTIFICATES be secured in the same manner as is provided
 for securing deposits of public funds by subdivision  three  of  section
 ten of this article.
   §  5. 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 SECTION TEN OF THE GENERAL MUNICIPAL LAW.  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.
   § 6. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.