What's happening
This bill expands eligibility for the Banking Development District program to include credit unions and federal credit unions, and extends district designations to 14 years with possible extensions.
Why it matters
Broadens access to financial services in underserved areas. by allowing credit unions and federal credit unions to participate in the Banking Development District (BDD) program, potentially bringing more options for affordable banking products to communities that lack them.
Increases stability and investment incentives. for financial institutions by extending the BDD designation from 10 years to 14 years, with opportunities for further extensions. This longer time frame may encourage banks and credit unions to make larger, longer-term commitments to the neighborhoods they serve.
Levels the playing field among financial institutions. by giving credit unions the same opportunity as banks to receive municipal deposits and other benefits—but only for branches located within BDDs and only from the sponsoring municipality. This could foster more competition and innovation in local banking services.
Requires regulatory oversight and rulemaking. to ensure that newly eligible institutions (credit unions and federal credit unions) participate under clear, consistent guidelines, which may help maintain the program’s integrity and ensure community needs are met.
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Who cares
State and federal credit unions
The bill would make them eligible to participate in the banking development district program, including accepting public deposits under restrictions tied to district branches.
Local governments sponsoring banking development districts
The bill would set district designations at fourteen years and allow extensions for additional five- or ten-year periods.
Banks and trust companies participating in the program
Their districts would have a defined designation period and an opportunity for extensions before expiration.
Department of Financial Services
The superintendent would be authorized to extend district designations and required to issue rules allowing state and federal credit unions to participate.
Headline styles
Expand Banking District Access
Plain English, a few words. Used as the page title.
Sponsors
History
- Signed chap.629
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading rules cal.112
- Substituted for A3320
- Referred to ways and means
- Delivered to assembly
- Passed senateVote 51–11
- Amended on third reading (t) 727a
- Advanced to third reading
- 2nd report cal.
Show 2 earlier actions
- 1st report cal.181
- Referred to banks
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Expand Banking District Program
Assembly Floor Calendar · Sponsor Kenneth Zebrowski
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
727--A Cal. No. 181
2019-2020 Regular Sessions
IN SENATE (Prefiled)
January 9, 2019
Introduced by Sens. MONTGOMERY, BROOKS, COMRIE, HOYLMAN, PARKER, SALA- ZAR, SANDERS, STAVISKY -- read twice and ordered printed, and when printed to be committed to the Committee on Banks -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading
AN ACT to amend the banking law, in relation to the banking development district program; to amend chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, in relation to the effectiveness thereof
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 2 of section 96-d of the banking law, as added by chapter 204 of the laws of 1997, is amended to read as follows:
2. A local government, in conjunction with a bank, trust company or national bank, may submit an application to the superintendent for the designation of a banking development district. The superintendent shall issue a determination on such an application within sixty days of receiving such application. If an application is approved, the superintendent shall transmit notification of [such approval] the designation of a banking development district to the local government, the bank, trust company or national bank, the state comptroller, the commissioner of taxation and finance, the commissioner of the department of economic development, the temporary president of the senate and the speaker of the assembly. The designation of a banking development district shall be valid for fourteen years. Prior to the expiration of a banking development district designation, the superintendent may extend the designation for one or more additional five or ten year periods.
§ 2. Section 4 of chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03497-02-9
S. 727--A 2
program, as amended by chapter 46 of the laws of 2016, is amended to read as follows:
§ 4. This act shall take effect on the first day of January next succeeding the date on which it shall have become a law and section three of this act shall remain in effect until January 1, 2023 when upon such date it shall expire and be deemed repealed; provided however that any branch established prior to the expiration and repeal of section three of this act by a savings bank, savings and loan association, federal savings bank or federal savings and loan association in a banking development district pursuant to this act shall continue to operate in accordance with this act and remain eligible for all the rights and privileges authorized by this act.
§ 3. Subdivision 5 of section 96-d of the banking law, as added by chapter 526 of the laws of 1998, paragraph (a) as amended by chapter 328 of the laws of 1999 and paragraph (b) as further amended by section 104 of part A of chapter 62 of the laws of 2011, is amended to read as follows:
5. (a) Notwithstanding the provisions of subdivision two of section two hundred thirty-seven of this chapter; for the purposes of this section, paragraph c of subdivision two of section ten of the general municipal law, subdivision six of section one hundred five of the state finance law and section four hundred eighty-five-f of the real property tax law, any reference to a bank, trust company or national bank shall be deemed to include a savings bank, savings and loan association, federal savings and loan association [or], federal savings bank, credit union, or federal credit union; provided, however, that such provisions of law do not grant a savings bank, savings and loan association, federal savings and loan association [or], federal savings bank, credit union, or federal credit union eligibility to accept municipal or public funds or municipal or public moneys other than for the limited purposes of the establishment of a branch in a banking development district pursuant to this section. Any such municipal or public funds or moneys shall be deposited only at the branch established pursuant to this section, and any municipal funds or moneys may be deposited only by the sponsoring municipality in which the branch and banking development district are located; provided further that any such municipal or public funds or moneys shall be subject to the same requirements which apply to municipal or public funds or moneys deposited in a bank, trust company or national bank and shall also be subject to the provisions of section one hundred five of the state finance law or section ten of the general municipal law relating to such deposits.
(b) Notwithstanding any other provision of law, the superintendent of financial services shall promulgate rules and regulations to authorize the participation of savings banks, savings and loan associations, federal savings banks [and], federal savings and loan associations, credit unions, and federal credit unions in the program established pursuant to this section.
§ 4. This act shall take effect immediately; provided, however, that the amendments to subdivision 5 of section 96-d of the banking law made by section three of this act shall not affect the repeal of such subdivision and shall be deemed repealed therewith.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the banking law, in relation to the banking development district program; to amend chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, in relation to the effectiveness thereof
Purpose of the bill
This bill would amend the Banking Law to expand access to banking services in communities where there is a demonstrated need for addi- tional products and services.
Summary of provisions
Section 1 of the bill would limit the designation of a banking develop- ment district to fourteen years, yet allow for additional extensions in five or 10 year increments.
Section 3 of the bill would amend Banking Law S 96-d (5) to allow feder- al and state credit unions to participate in the banking development district program.
Sections 2 and 4 of the bill would set forth the effective dates.
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IN. APPLICABLE):
The amendments removed the requirement to offer certain products and services.
Legislative history
New bill.
Justification
Many communities in New York State lack consumer-banking services. In 1997, the Banking Development District (BDD) program was enacted to incentivize banks to locate branches in communities designated as under- served by the Department of Financial. Such communities either have no available financial service options, or only offer alternative(and often problematic) financial service options like check cashers and Pawn shops.
Under the BDD program, banks that open branches in underserved communi- ties are eligible to receive below market-rate deposits. Such deposits lower the financial risk the branches may incur when opening in an underserved community.
Currently, however, credit unions are currently ineligible to partic- ipate in the BDD program. Because banks and other eligible financial institutions have submitted a modest number of applications over the past twenty years, the program should be expanded to include credit unions to encourage additional banking services in underserved communi- ties.
At the same time, it is also appropriate to restrict the unlimited dura- tion of a BDD designation. Once a banking deficit in an under served community is corrected, the incentives provided under the BDD program are no longer needed. A fourteen-year designation limit (with unlimited extensions as necessary) would make the BDD program more efficient and allow for the allocation of resources to other communities.
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.