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

1 Co-sponsor

• Bill Perkins

BILL NUMBER:S7415

Title of bill

An act to amend the general municipal law and the state finance 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

Summary of provisions

This bill would amend Sections 10 and 11 of the General Municipal Law to authorize deposits of municipal funds in credit unions, savings banks and savings and loan associations. Deposits would only be authorized in any particular bank, credit union or savings and loans associations if such bank, credit union or savings and loans asso- ciation pays the mortgage recording taxes required by Article 11 of the Tax Law. 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 would be limited to one million dollars per depositary.

Reasons for support

This legislation advances New York City's long- standing goals of ensuring a fair and vibrant marketplace for consumers and businesses, through licensing, public education, and the enforcement of the City's consumer protection laws. The New York City Department of Consumer Affairs (DCA) Office of Financial Empowerment (OFE) was launched by the Center for Economic Opportunity in December 2007, as the first local government initiative in the nation aimed expressly at educating, empowering, and protecting those with low incomes, so they can build assets and make the most of their financial resources. One of OFE's primary goals is to ensure that individuals with low incomes have access to affordable, appropriate financial products offered by main- stream financial institutions, rather than having to rely on costly fringe services that erode their limited resources.

The efforts of DCA's OFE to link low income families to mainstream financial institutions through safe and affordable products and services depend upon a broad array of financial institution partners, including community development credit unions and banks. OFE's most innovative pilot programs to reach underbanked populations and help build savings - such as the "SaveNYC" and "Opportunity NYC" accounts - have relied upon the flexibility and creativity of credit unions and savings banks. Cred- it unions and savings banks often have branches located in the low income communities OFE targets, and offer basic transactional financial products that are more transparent and lower cost for low income house- holds than products offered by commercial banks. OFE's ability to increase the scale of existing pilot new programs and pilot new innova- tive banking products and services depends on the continued partnership of these types of institutions. Municipal deposits could allow credit unions and savings banks to increase their deposit base, and greatly scale up the offering of affordable products to serve New Yorkers with low incomes throughout New York City and State.

This legislation would allow DCA's OFE to expand its efforts to link families with low incomes to safe, affordable products and services offered by mainstream financial institutions.

Accordingly, the Mayor urges the earliest possible favorable consider- ation of this proposal by the Legislature.

Prior legislative history

A7790 of the 2011-2012 legislative session.

Fiscal implications

None.

Effective date

This act shall take effect immediately.