Establishes a commission to study the feasibility of establishing a bank owned by the state of New York and report thereon within 2 years

Summary of provisions

Section 1. Creates the New York State Commission on Establishing a Bank Owned by New York State, known as the Commission. This study will analyze the feasibility of establishing, a bank owned by the State of New York or by a public authority constituted by the State of New York.

Section 2.

a. The Commission should include 15 members:

(i-vi) Six are appointed by the Governor of which, one shall be a representative of the New York State Banking Department, one shall represent the New York State Department of Taxation and Finance and the remaining four shall be employees of the Executive Branch and at least one must represent the banking and financial industries, and at least one shall represent community banking, and no more than one member may be a representative of any financial service firm located within the State; One shall the Comptroller, or his designee; Three shall be appointed by the Temporary President of the Senate, one of which must be a Senator; One shall be appointed by the Minority Leader of the Senate; Three shall be appointed by the Speaker of the Assembly, one of which must be a member of the Assembly; and one shall be appointed by the Minority Leader of the Assembly.

b. The Governor shall designate one of his/her appointees to chair the Commission.

c. The members of the Commission shall be appointed no later than ninety days after the effective date.

Section 3. This Commission shall:

(i-ix) examine the technical, legal and financial feasibility of establishing a state-owned bank, including but not limited to the purpose of infrastructure investments; seek participation in its deliberations from the President of the Federal Reserve Bank of New York or the President's designee; evaluate the experiences of other states with state-owned banks, identifying their performances and evaluating their lending practices to determine their success in filling lending caps not filled by the private sector; evaluate the manner in which public funds are invested or deposited by the State and its political subdivisions including funds managed by the State Comptroller including state and local pension funds; examine the infrastructure investment activities conducted by other states with state-owned banks; examine the lending practices, including lending to support infrastructure, of the existing public agencies in the

commonwealth that perform lending service. Any other public authority in the State that lends money shall cooperate fully with the Commission and shall supply information reasonably required by the Commission to carry out its charge; investigate how a State Bank may promote the agriculture, education, community development, economic development, commerce and industry within the State; hold at least three public hearings; and publish its findings and recommendations in a written report no later than one year after the effective date of this act.

Section 4. States the effective date of the law.

Justification

This legislation is modeled on 2010 legislation in Connecticut that created a Task Force to examine the technical, legal, and financial feasibility of establishing a state-owned bank for infrastructure purposes. The interest in exploring the feasibility of state-owned banks has grown because of the recent national fiscal crisis including the bank bail-outs and ongoing recession, all of which has had a detrimental impact on every state, particularly New York.

North Dakota, escaped much of the financial crisis. Many attribute North Dakota's sound economy to its state-owned bank. The Bank of North Dakota (Bank) was created in 1919 with the mission of promoting agriculture, commerce and industry in North Dakota. The State of North Dakota places all public revenues into the Bank, which are governed by strict regulations. The Bank was not established to compete with commercial or community banks so it partners with 100 other financial institutions to help the North Dakota citizenry. The Bank is an economic development bank, helping large, small and medium sized businesses within the state, It also provides student loans and special assistance to start-ups. The Bank has emerged as a model for other states because it did not engage in the risky financial strategies that contributed to the catastrophic bank failures throughout the country. Many candidates for public office, from both political parties in states such as Oregon, Illinois, California, Florida, Idaho, Vermont, and Washington have proposed the establishment of state-owned banks citing numerous advantages. For example, state banks are depositories of public funds operating more conservatively than for-profit banks, eschewing the riskier moneymaking schemes, State-owned banks have a primary mission to develop the state and local economy, investing in infrastructure and providing loans to businesses, not to generate profits for shareholders.

This legislation creates a Commission with a broad mandate. It will examine all aspects of a state-owned bank, including how it can promote the agriculture, education, economic development, commerce and industry in New York State.

Prior legislative history

A6737 of 2011/2012.

Fiscal implications

Unknown at this time.

Effective date

This act shall take effect immediately and shall expire and be deemed repealed one year after such effective date.