What's happening
This bill allows savings banks, credit unions, and similar institutions to accept and secure municipal deposits in New York.
Why it matters
Expands competition for municipal deposits. , potentially leading to better interest rates or lower fees for local governments, as more financial institutions—like credit unions and savings banks—can now bid for these funds.
Supports local and community-based financial institutions. by allowing them to accept municipal deposits, which can help keep more public money circulating within local economies and support community lending.
Imposes security requirements. to protect municipal funds, mandating that these newly eligible institutions must pledge assets or provide other satisfactory security to ensure the safety and repayment of public monies.
Updates regulatory language. to ensure that all types of institutions accepting municipal deposits are federally insured, helping to maintain public trust in the safety of municipal funds.
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Who cares
Municipal corporations and local government finance officials
The bill would expand their eligible depositories to include additional federally insured institutions with a principal or branch office in New York.
Credit unions
The bill would authorize them to accept local government deposits and require security satisfactory to the depositor when applicable law, decree or regulation requires it.
Savings banks
The bill would remove the prohibition on accepting municipal corporation deposits and authorize them to pledge assets or furnish other required security.
Savings and loan associations
The bill would include qualifying associations among eligible municipal depositories and authorize them to pledge assets or furnish required security.
Headline styles
Let More Banks Hold Town Funds
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to local government
- Referred to local government
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5806
2019-2020 Regular Sessions
IN SENATE
May 15, 2019
Introduced by Sen. MAYER -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government
AN ACT to amend the general municipal law and the banking law, in relation to allowing certain entities to accept and secure deposits from municipal corporations
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph d 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:
d. "Bank" shall mean a bank as defined by the banking law or a national banking association located and authorized to do business in New York; or a savings bank, savings and loan association, credit union, national bank, federal savings association, federal credit union, or out-of-state bank, as such terms are defined in the banking law, in each case having a principal or branch office in this state and insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor to the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund.
§ 2. Section 454 of the banking law is amended by adding a new subdivision 38 to read as follows:
38. To accept deposits for credit to a local government, as defined in paragraph a of subdivision one of section ten of the general municipal law provided that 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.
§ 3. Subdivision 2 of section 237 of the banking law, as amended by chapter 360 of the laws of 1984, is amended to read as follows:
2. [No savings bank shall accept any deposit for credit to any municipal corporation] A savings bank may accept deposits for credit to any
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11282-03-9
S. 5806 2
municipal corporation, provided that such savings bank 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.
§ 4. Section 234 of the banking law is amended by adding a new subdivision 27 to read as follows:
27. Pursuant to subdivision two of section two hundred thirty-seven of this article, to 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 and to exercise the powers contained in section ninety-six-b of this chapter.
§ 5. Section 383 of the banking law is amended by adding a new subdivision 18 to read as follows:
18. Pursuant to subdivision two of section two hundred thirty-seven of this chapter, to 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 and to exercise the powers contained in section ninety-six-b of this chapter.
§ 6. This act shall take effect on the ninetieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general municipal law and the banking law, in relation to allowing certain entities to accept and secure deposits from municipal corporations
Purpose or general idea of bill
To allow savings banks, savings and loan associations and credit unions to accept deposits from municipalities.
Summary of provisions
Section 1 amends paragraph d of subdivision 1 of section 10 of the general municipal law, as amended by chapter 623 of the laws of 1998, to include in the definition of "Bank", savings bank, savings and loan association, credit union, national bank, federal savings association, federal credit union, or out-of-state bank, provided such banking enti- ties have a principal or branch office in this state and are insured by the either the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund (or any successors to the Federal Deposit Insurance Corporation or the National Credit Union Share Insur- ance Fund).
Section 2 adds a new subdivision 38 to section 454 of the banking law to provide credit unions with the power to accept deposits for credit to a local government.
Section 3 removes restrictions on savings banks' acceptance of deposits from local governments.
Section 4 adds a new subdivision 27 to section 234 of the banking law to provide savings banks with the power to pledge assets or furnish other security for deposits accepted from local governments.
Section 5 adds a new subdivision 18 to section 383 of the banking law to provide savings and loan associations with the power to pledge assets or furnish other security for deposits accepted from local governments.
Section 6 sets an effective date.
Justification
Municipalities are currently restricted in their banking activities to engaging commercial banks. The primary reason for this is that, histor- ically, there were fewer choices. Savings banks and savings & loan asso- ciations were less secure entities that primarily served individuals, and credit unions were not yet in existence when current law was enacted. Over time, savings banks, savings & loan associations, and credit unions have exhibited growth and sophistication significant that is comparable to larger commercial banks in terms of both service and security, including with respect to banking products used by munici- palities. Allowing savings banks, savings & loans associations, and credit unions to accept municipal deposits would remove outdated restrictions and provide communities with local, competitive alterna- tives to national commercial banks.
Prior legislative history
New bill.
Fiscal implications
None.
Effective date
This act shall take effect on the ninetieth day after it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.