What's happening
This bill prohibits New York public authorities from depositing funds in banks rated less than satisfactory under the Community Reinvestment Act.
Why it matters
Promotes Responsible Banking. By only allowing public authorities to deposit funds in banks with at least a “satisfactory” Community Reinvestment Act (CRA) rating, this bill encourages banks to better serve low- and moderate-income communities, as CRA ratings reflect how well banks meet community credit needs.
Influences Bank Behavior. The legislation uses the leverage of public deposits to push banks to improve their CRA performance, potentially motivating institutions to increase fair lending, invest in local development, or offer more equitable financial services in order to qualify for public funds.
Protects Public Funds from Risk. By restricting deposits to banks with proven satisfactory CRA records, the bill aims to ensure public funds are placed in institutions with a track record of community engagement and regulatory compliance, possibly reducing reputational or ethical risks for the state.
Could Impact Banking Choices. Some banks—especially those with lower CRA ratings—may lose access to significant public deposits, which could affect their business operations and incentivize them to improve their practices to regain eligibility.
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Who cares
Headline styles
Require Banks Meet CRA
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to corporations, authorities and commissions
- Referred to corporations, authorities and commissions
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2265
2017-2018 Regular Sessions
IN SENATE
January 12, 2017
Introduced by Sen. PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions
AN ACT to amend the public authorities law, in relation to funds of the state
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The public authorities law is amended by adding a new section 2891 to read as follows:
§ 2891. Deposits. Notwithstanding any other provisions of this chapter, no public authority, commission or public benefit corporation continued or created by this chapter shall deposit its moneys in a banking institution to which the Community Reinvestment Act of 1977, United States P.L. 95-128, applies unless such institution has received a record of performance no lower than satisfactory as determined under such act in accordance with section twenty-eight-b of the banking law.
§ 2. This act shall take effect on the one hundred eightieth day after it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02728-02-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the public authorities law, in relation to funds of the state
Purpose
This bill would prohibit public authorities from depositing their moneys in a banking institution with a federal Community Reinvestment Act rating of less than satisfactory.
Summary of provisions
Section 1 of the bill amends Article 9 of the public authorities law to specify that notwithstanding any other provision of this chapter, no public authority or public benefit corporation chartered by The State of New York shall deposit its moneys in a banking institution to which the Community Reinvestment Act of 1977, United States P.L.95-128 applies, unless such institution has received a record of performance no lower than satisfactory.
Justification
In 1977, Congress passed the Community Reinvestment Act (CRA), a law that sought to eliminate discriminatory behavior by banks. The CRA requires banks to meet the financial needs of their communities by investing in low to moderate-income neighborhoods. One of the CRA's most powerful tools to spur banks to return capital to the neighborhoods from which they extracted it, is the CRA's focus upon neighborhood lending target compliance, and enforcement against banks that fail to meet federal lending guidelines. The overall goal is to encourage banks to lend in distressed communities, and by creating such a pool of liquid funds, to increase economic development, small business and consumer lending, and homeownership.
A recent report by the Association for Neighborhood and Housing Development (ANHD) concerning New York City's 17 largest banks reveal that while deposits grew by more than $452 billion in 2007 and 2008, these institutions reduced community lending 20.2% or $560 million dollars. Furthermore, the report concludes that these banks also reduced their multi-family loans in low-income areas by nearly twenty-five percent, or $1.3 billion dollars. While this report may be no more than a window into a problem whose parameters are different outside of New York City, the dramatic declines in lending portrayed during a period of consumer credit crisis are distressing and endanger the prosperity and recovery of New York's communities.
In New York, billions of dollars are held on deposit by public authorities, commissions and public benefit corporations, and the deposit or withholding of such funds can act as a power incentive for CRA compliance. This bill would further enhance CRA compliance by directing the public authorities continued or created in New York not to deposit funds in those banks that have not received a CRA rating of satisfactory or better.
Prior legislative history
2015-16: S.2453 - Referred to Corporation, Authorities and Commissions 2013-14: S.2780/A.2058 - Referred to Corporations, Authorities and Commissions 2011-12: S.2850/A.5947 - Referred to Corporations, Authorities and Commissions/Referred to Ways and Means 2009-10: S.8507/A.11713 - Referred to Rules/Referred to Corporations
Fiscal impact on the state
None.
Effective date
This act shall take effect on the one hundred-eightieth day after it shall have become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.