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History
- Referred to local government
- Referred to local government
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BILL NUMBER:S1510
Title of bill
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
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, and limits receipt of municipal deposits to $250,000.
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.
Prior legislative history
2013-2014 Referred to Local Government; 2011-2012: S.1186 - Local Government 2009-2010: 8.8296C/A.11538C - Referred to Rules/Referred to Banks Similar legislation was introduced in 2006 in the Assembly and Senate. 2007-2008: A.7322-A - Ways & Means; S.4071-A - Local Government 2006: A.11798 - Rules; S.7916-A - Local Government
Legislation on the same topic, without limitation upon the amount of funds a municipality could deposit, was also introduced in the Senate and Assembly in 2006. 2007-2008: S.3664 - Local Government; A.6511 - Banks 2006: S.639 Local Government
Fiscal implications
None to the State.
Effective date
On the 90th day after becoming law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.