 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1887
 
                               2025-2026 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 14, 2025
                                       ___________
 
        Introduced  by  M.  of  A.  STECK,  REYES, EPSTEIN, HYNDMAN, KIM, SIMON,
          BURDICK, DeSTEFANO -- read once and referred to the Committee on Banks
 
        AN ACT to amend the state finance law, in relation to  establishing  the
          empire  state  public  bank;  and  providing for the repeal of certain
          provisions upon expiration thereof

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. The state finance law is amended by adding a new article 17
     2  to read as follows:
     3                                 ARTICLE 17
     4                          EMPIRE STATE PUBLIC BANK
     5  Section 254. Legislative intent.
     6          255. Definitions.
     7          256. Creation.
     8          257. Commission.
     9          258. Transition board.
    10          259. Deposit of public funds.
    11          260. Investment of state moneys.
    12          261. Infrastructure loans.
    13          262. Student loans.
    14          263. Business, non-profit and individual loans.
    15          264. Treasury and banking services.
    16          265. Management.
    17          266. Advisory board.
    18          267. Financial regulation.
    19          268. Reporting requirements.
    20          269. Ethical requirements.
    21          270. Fees and taxes.
    22          271. Bank records.
    23          272. Capitalization.
    24          273. Public depositary.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04520-01-5
        A. 1887                             2
 
     1          274. Application of this chapter to the president.
     2          275. Cash and demand deposits available.
     3          276. Permitted investments.
     4          277. Severability.
     5    §  254.  Legislative  intent.  1. The legislature finds that there are
     6  significant public infrastructure, higher education and business  devel-
     7  opment  needs of the state that are unmet. The legislature further finds
     8  that there are opportunities to use the  state's  depository  assets  to
     9  generate additional benefit for the people and the economy of the state.
    10  Therefore,  the  legislature  intends  to create the empire state public
    11  bank as a legacy institution that amasses sufficient capital reserves to
    12  address opportunities now and in the future.
    13    2. The legislature intends that the public bank may:
    14    (a) Facilitate investment in, and financing of, public  infrastructure
    15  systems  that  will increase public health, safety, and quality of life,
    16  improve environmental conditions, and  promote  community  vitality  and
    17  economic growth;
    18    (b)  Assist  students  who  are in need of additional low-cost student
    19  loans in order to finance the cost of higher education;
    20    (c) Provide businesses, communities and low income areas of our  state
    21  access to low-interest capital; and
    22    (d)  Leverage  New York's financial capital and resources, and work in
    23  partnership with financial institutions, community-based  organizations,
    24  economic development organizations, guaranty agencies, and other similar
    25  organizations.
    26    3.  The  mission of the bank is to use New York's depository assets in
    27  ways that afford most efficient use  of  taxpayer  revenues  and  public
    28  resources  for  the  benefit of the people and economy of the state. The
    29  legislature intends for the bank to apply business strategies to  manage
    30  taxpayer  revenues while concurrently meeting identified needs and stra-
    31  tegic opportunities across  the  state.  In  achieving  its  purpose  of
    32  improving  public  infrastructure and increasing access to higher educa-
    33  tion, the legislature intends for the bank to adhere  to  the  following
    34  priorities:
    35    (a) Institutional safety and soundness;
    36    (b) Long-term viability;
    37    (c) Social return and monetary return on investments;
    38    (d) Prudent and best banking and business practices;
    39    (e) Highest ethical, accountability, and transparency standards; and
    40    (f) Insulation from political influence.
    41    §  255.  Definitions. The definitions in this section apply throughout
    42  this article unless the context clearly requires otherwise.
    43    1. "Board" means the advisory board of the empire state public bank.
    44    2. "Commission" means the empire state public bank commission.
    45    3. "Department" means the department of financial services.
    46    4. "Director" means  the  director  of  the  department  of  financial
    47  services.
    48    5."Superintendent"  means  the  superintendent  of  the  department of
    49  financial services.
    50    6. "Public infrastructure system" means a system of a local government
    51  or political subdivision, a special purpose district,  a  public  school
    52  district,  an  institution  of  higher education, a federally recognized
    53  Indian tribe, or the state,  including  but  not  limited  to  a  system
    54  involving:    Wastewater  treatment; storm water management; solid waste
    55  disposal; drinking water treatment; flood control levees;  energy  effi-
    56  ciency enhancements; roads, streets, and bridges; transportation infras-
        A. 1887                             3
 
     1  tructure,  including  freight  and  passenger  rail  and public transit;
     2  broadband and telecommunications infrastructure; outdoor recreation  and
     3  habitat  protection  facilities;  community,  social  service, or public
     4  safety  facilities;  schools  and educational facilities; and affordable
     5  housing.
     6    7. "State-chartered bank" means any corporation  organized  under  the
     7  laws of this state that is engaged in banking, other than a trust compa-
     8  ny,  savings  association, or a mutual savings bank. It does not include
     9  the empire state public bank.
    10    8. "State moneys" means all moneys or funds belonging  to  or  in  the
    11  custody of the state under the control of the state comptroller shall be
    12  considered as state moneys or funds.
    13    9. "Comptroller" means the comptroller of the state of New York.
    14    10. "Bank" means the empire state public bank.
    15    § 256. Creation. The empire state public bank is created.
    16    §  257.  Commission.  1.  The  empire  state public bank commission is
    17  created as the primary governing authority of the bank.  The  commission
    18  shall consist of the governor, the lieutenant governor, the chair of the
    19  assembly  banking  committee, the chair of senate banking committee, and
    20  the state comptroller.
    21    2. The commission shall adopt rules regarding the:
    22    (a) Safety and soundness standards of the bank;
    23    (b) Criteria for evaluating, approving, and monitoring loans;
    24    (c) Eligibility requirements and limits for borrowing;
    25    (d) Transparency requirements for bank operations;
    26    (e) Ethics and conflict of interest requirements for  the  commission,
    27  the  board,  and  officers and employees of the bank, including rules to
    28  ensure that they perform their functions in compliance with  the  public
    29  officers law; and
    30    (f) Other topics as needed for efficient administration of the bank.
    31    3.  The  commission shall commence bank operations by April first, two
    32  thousand twenty-six.
    33    4. The commission may delegate to the bank president such  duties  and
    34  powers  as  deemed  necessary  to  carry on the business of the bank and
    35  enforce this article efficiently and effectively. The commission may not
    36  delegate its rule-making or policy-making authority.
    37    5. The commission shall adopt policies  and  procedures  for  its  own
    38  governance.
    39    6.  The  commission  may  establish  technical  advisory committees or
    40  consult with public and private  sector  experts  in  substantive  areas
    41  related to the bank's mission, objectives, and duties.
    42    §  258.  Transition  board. 1. (a) The bank transition board is estab-
    43  lished, with members as provided in this section.
    44    (i) The temporary president of the senate  shall  appoint  one  member
    45  from each of the two largest caucuses of the senate.
    46    (ii) The speaker of the assembly shall appoint one member from each of
    47  the two largest caucuses of the assembly.
    48    (iii)  The  temporary  president  of the senate and the speaker of the
    49  assembly jointly shall appoint seven citizen members with a  substantial
    50  background in banking or financial issues.
    51    (b)  The  temporary  president  of  the  senate and the speaker of the
    52  assembly jointly shall select the chair from among the  citizen  member-
    53  ship. The chair shall convene the initial meeting of the bank transition
    54  board within forty-five days after the effective date of this section.
    55    2. The bank transition board shall develop and recommend the following
    56  to the commission within the timeline established by the commission:
        A. 1887                             4
 
     1    (a)  A  start-up  business  plan  for the bank that includes plans and
     2  timelines for functions that are new and functions transitioning to  the
     3  bank that were previously performed by another entity;
     4    (b) Initial capital requirements of the bank;
     5    (c) Options for capitalizing the bank; and
     6    (d)  Other items requested by the commission in order to commence bank
     7  operations by April first, two thousand twenty-six.
     8    3. Legislative members of the bank transition board must be reimbursed
     9  for travel expenses in accordance with the  rules  of  their  respective
    10  houses.    Non-legislative  members  are  entitled  to be reimbursed for
    11  expenses incurred in the discharge of their duties under this article.
    12    4. The bank transition board may  appoint  an  interim  president  and
    13  other  necessary  staff who are exempt from the provisions of this chap-
    14  ter, and who serve at the board's pleasure on such terms and  conditions
    15  as  the  board determines. The department must provide technical assist-
    16  ance to the bank transition board. The  board  may  also  contract  with
    17  additional  persons  who have specific technical expertise if the exper-
    18  tise is necessary to carry out the requirements of this section.
    19    § 259. Deposit of public funds. 1. (a) The bank  shall  serve  as  the
    20  depository  for state moneys once the bank has built sufficient capacity
    21  to accept and manage state moneys, as determined by the commission.  The
    22  commission  shall  establish a process and time frame for the deposit of
    23  state moneys into the bank.
    24    (b) The comptroller shall deposit state moneys in the bank in  accord-
    25  ance  with  the  time  frame and guidelines determined by the commission
    26  under this section.
    27    2. All deposits in the bank are guaranteed by the state.
    28    3. All income earned by the bank on state moneys that are deposited in
    29  or invested with the bank must be credited to and become a part  of  the
    30  revenues and income of the bank.
    31    4.  The  bank  may accept deposits of public funds, but is exempt from
    32  the requirements of section one hundred five of this chapter.
    33    5. The bank may accept funds from any source, including federal  funds
    34  or other public funds.
    35    6.  The  commission  shall  review  state accounts that contain public
    36  funds that are not state moneys, such as the state insurance  fund,  and
    37  make  recommendations  to the governor and the appropriate committees of
    38  the legislature as to which accounts should be deposited in the bank.
    39    7. The bank shall make disbursements to the state funds  as  necessary
    40  for the function of state government.
    41    §  260.  Investment  of state moneys. The bank may invest state moneys
    42  deposited in the bank that are not reasonably expected to  be  necessary
    43  to meet the short or intermediate-term liquidity needs of the state. The
    44  state  comptroller  retains authority to manage and invest the amount of
    45  funds necessary to meet the operational needs of state government.
    46    § 261. Infrastructure loans. The  bank  is  authorized  to  facilitate
    47  investment  in, and financing of, construction, rehabilitation, replace-
    48  ment, and improvement of new and existing public infrastructure systems.
    49  Before initiating operations, the commission must present an implementa-
    50  tion plan and any necessary legislation to the governor and  appropriate
    51  legislative committees, that:
    52    1. Identifies the public infrastructure systems that the bank plans to
    53  target initially;
    54    2.  Identifies any existing state programs that the bank recommends be
    55  transferred under its umbrella, and the  steps  and  timelines  for  the
    56  transitions;
        A. 1887                             5
 
     1    3. Describes additional financing products and services the bank plans
     2  to offer, the target markets, anticipated rates, terms, and conditions;
     3    4. Demonstrates how bank products and services will increase access to
     4  capital for public infrastructure systems and complement those of exist-
     5  ing public and private sources; and
     6    5.  Demonstrates  how  the  bank plans to maximize revenues and public
     7  benefit.
     8    § 262. Student loans. The bank is authorized  to  administer  a  state
     9  guarantee  loan  program  to assist students in need of low-cost student
    10  loans and related loan benefits to address educational needs  as  neces-
    11  sary to support student success.  The commission shall develop an imple-
    12  mentation plan that:
    13    1.  Identifies  the  needs  and benefits to selected students that the
    14  program will target initially;
    15    2. Demonstrates how the bank plans to  maximize  revenues  and  public
    16  benefit while minimizing public risk;
    17    3.  Demonstrates  how  the  bank  will  coordinate  with the office of
    18  student financial assistance; and
    19    4. Identifies the ways that the program  will  address  the  following
    20  issues related to loans:
    21    (a) Qualification criteria for students;
    22    (b) Obligations and options for loan repayment;
    23    (c) Requirements for loan guarantees and reserves;
    24    (d) Fee and interest rate structure;
    25    (e) Maximum loan amounts; and
    26    (f)  Ensuring  student  awareness  of grants, federal loans, and other
    27  financial aid programs.
    28    § 263. Business, non-profit and individual loans. The bank is  author-
    29  ized  to  leverage its financial capital and resources to provide access
    30  to low-cost capital to businesses, entrepreneurs, non-profit  community-
    31  based  organizations, start-up businesses and below average income areas
    32  and individuals of this state to further economic  growth,  create  jobs
    33  and build and sustain affordable housing for the residents of this state
    34  as provided for by this section. The bank is also authorized to leverage
    35  its  financial capital and resources to provide access to low-cost capi-
    36  tal to bring fiscally sound and financially successful  businesses  into
    37  this state as provided for by this section.  The bank is also authorized
    38  to  leverage  its  financial  capital and resources to provide access to
    39  low-cost capital to established businesses in this state for the purpose
    40  of providing financial stability for the bank as provided  for  by  this
    41  section.
    42    1.  Purchase,  guarantee  or  hold loans made by private banks, credit
    43  unions or other financial institutions doing business in this state.
    44    2. Make loans in the form of participation loans with community  banks
    45  in  this state to qualified individuals and businesses residing or doing
    46  business in this state when the originator of  the  loan  is  a  private
    47  bank, credit union or other financial institution.
    48    3.  Serve  as  a  banker's  bank  for chartered banks in this state by
    49  providing correspondent banking services and other related  services  in
    50  keeping with its mission.
    51    4.  Accept  deposits related to such transactions from banks and other
    52  financial institutions.
    53    5. Be authorized to issue bank stock loans to state-charted banks.
    54    § 264. Treasury and banking services. 1.  For  financial  institutions
    55  that  make the bank a reserve depository, the bank may serve as a clear-
        A. 1887                             6
 
     1  inghouse, including all facilities for providing  domestic  and  foreign
     2  exchange, and may rediscount paper, on terms the commission provides.
     3    2. The bank may provide corporate trust services for the state and its
     4  political  subdivisions  including  trustee, escrow agent, paying agent,
     5  bond registrar, and transfer agent.
     6    3. The bank may buy and sell federal funds; issue  letters  of  credit
     7  for public deposits; and provide a safekeeping service for United States
     8  treasury  securities,  federal  agency securities, corporate bonds, tax-
     9  free bonds, money market investments, and mortgage-backed securities.
    10    4. The bank may perform  services  currently  contracted  out  by  the
    11  office  of  temporary  disability services regarding electronic benefits
    12  transfer cards.
    13    § 265. Management. 1. The commission shall appoint  a  bank  president
    14  with  demonstrated  and substantial experience in banking. The president
    15  shall serve at the commission's pleasure, on such terms  and  conditions
    16  as the commission determines.
    17    2. The president shall provide support to the commission and the advi-
    18  sory  board,  carry  out  bank policies and programs, and exercise addi-
    19  tional authority as may be delegated by the commission.
    20    3. Subject to available funding and consistent with commission  direc-
    21  tion, the bank president:
    22    (a)  May  employ  such  additional  personnel  as are necessary to the
    23  bank's operations.   This employment shall be  in  accordance  with  the
    24  state civil service law; and
    25    (b)  May contract with persons who have the technical expertise needed
    26  to carry out a specific, time-limited project.
    27    § 266. Advisory board. 1. (a) A public bank advisory board  consisting
    28  of  eleven  members  is created to review the bank's operations and make
    29  recommendations relating to the bank's management,  services,  policies,
    30  and procedures.
    31    (b)  The governor shall appoint members of the advisory board, subject
    32  to confirmation by the senate. The members of the advisory board must be
    33  knowledgeable in banking or finance and must represent  a  diversity  of
    34  experience  relevant  to  activities  of  the  bank.  Six or more of the
    35  members must have expertise in banking or finance.  Two members must  be
    36  from  a consumer advocacy or social justice organization or have a back-
    37  ground in the area of consumer advocacy or  social  justice.    Advisory
    38  board members serve at the pleasure of the governor.
    39    (c) The board shall choose its chair from among its membership.
    40    2.  The  term of the members is three years. Five of the initial board
    41  members must be appointed to serve an initial term of three years, three
    42  must be appointed to serve an initial term of two years, and  the  three
    43  remaining  members  must  be  appointed  to serve an initial term of one
    44  year. All subsequent terms are three years. To ensure that the board can
    45  continue to act, a member whose term expires  shall  continue  to  serve
    46  until  their replacement is appointed. In the case of any vacancy on the
    47  board for any reason, the governor shall appoint a new member  to  serve
    48  out  the  term  of  the person whose position has become vacant. A board
    49  member may be removed for misconduct inconsistent with  the  mission  of
    50  the bank by the governor.
    51    3.  Members  of  the  advisory board are entitled to reimbursement for
    52  expenses incurred in the discharge of their duties under this article.
    53    § 267. Financial regulation. 1. The bank must maintain capital adequa-
    54  cy and other standard indicators of safety and soundness as is appropri-
    55  ate for a publicly owned financial institution.
        A. 1887                             7
 
     1    2. The superintendent may examine the bank in the  same  manner  as  a
     2  state-chartered  financial  institution.  The  superintendent shall take
     3  into consideration the unique circumstances of a publicly  owned  finan-
     4  cial  institution when examining the bank. The bank shall pay the direc-
     5  tor for the reasonable costs of examinations.
     6    3.  The  bank  must  undergo  independent  audits on the same basis as
     7  state-chartered banks.
     8    § 268. Reporting requirements. 1.  The  bank  shall  submit  quarterly
     9  reports to the commission in a manner and form prescribed by the commis-
    10  sion.    Late reports are not permissible and shall be cause for removal
    11  of the person or persons responsible.
    12    2. The commission shall make  a  report  to  the  legislature  on  the
    13  affairs of the bank by December first of each year.
    14    § 269. Ethical requirements. The bank may not make a loan to any advi-
    15  sory  board  member,  the president, public officers or employees of the
    16  bank. Advisory board members, the president, and employees of  the  bank
    17  must  follow any applicable ethical requirements in rules, policies, and
    18  procedures adopted by the commission.
    19    § 270. Fees and taxes. The bank is exempt from payment of all fees and
    20  taxes levied by the state or any of its subdivisions.
    21    § 271. Bank records. 1. Certain bank business records and  records  of
    22  the department relating to the bank are exempt from public disclosure as
    23  authorized by the department of financial services.
    24    2.  Financial  and  commercial  information  and  records submitted to
    25  either the department or the commission for the purpose of administering
    26  this article may be shared between the department and  the  comptroller.
    27  These  records  may  also  be used in any suit or administrative hearing
    28  involving any provision of this chapter.
    29    3. This section does not prohibit:
    30    (a) The issuance of general statements based on the reports of persons
    31  subject to this article as long as the statements do  not  identify  the
    32  information furnished by any person; or
    33    (b)  The  publication by the director or the commission of the name of
    34  any person violating this article and a statement of the manner  of  the
    35  violation by that person.
    36    § 272. Capitalization. The commission must make recommendations to the
    37  appropriate fiscal committees of the legislature on options for capital-
    38  ization  of the bank. Any recommendations must include draft legislation
    39  for consideration by the legislature.
    40    § 273. Public depositary. The empire  state  public  bank  created  in
    41  section  two  hundred  fifty-six  of this article may accept deposits of
    42  public funds, but is not a public depositary.
    43    § 274. Application of this chapter to the president. The provisions of
    44  this chapter outside this article do  not  apply  to  the  president  as
    45  defined in section two hundred sixty-five of this article.
    46    § 275. Cash and demand deposits available. The state comptroller shall
    47  maintain  at  all  times  cash,  or  demand deposits in the empire state
    48  public bank or qualified public depositaries in an amount needed to meet
    49  the operational needs of state government. The state  comptroller  shall
    50  not  be  considered to be in violation of unlawful issuance of checks or
    51  drafts if such comptroller maintains demand accounts in  public  deposi-
    52  taries in an amount less than all treasury warrants issued and outstand-
    53  ing.
    54    §  276.  Permitted  investments. Subject to the limitations in section
    55  two hundred sixty of this article, wherever there is in any fund  or  in
    56  cash  balances  in  the  state treasury more than sufficient to meet the
        A. 1887                             8
 
     1  current expenditures properly payable therefrom, the bank may invest  or
     2  reinvest  such portion of such funds or balances as the bank deems expe-
     3  dient in the following defined securities or classes of investments:
     4    1.  Certificates, notes, or bonds of the United States, or other obli-
     5  gations of the United States or its  agencies,  or  of  any  corporation
     6  wholly owned by the government of the United States;
     7    2.  In  state,  county,  municipal,  or  school  district bonds, or in
     8  warrants of taxing districts of the state. Such bonds and warrants shall
     9  be only those found to be within the limit of indebtedness prescribed by
    10  law for the taxing district issuing them and to be general  obligations.
    11  The  state comptroller may purchase such bonds or warrants directly from
    12  the taxing district or in the open market at such prices and  upon  such
    13  terms  as  it may determine, and may sell them at such times as it deems
    14  advisable;
    15    3. In motor vehicle fund warrants when authorized by agreement between
    16  the state comptroller and the  department  of  transportation  requiring
    17  repayment  of  invested  funds from any moneys in the motor vehicle fund
    18  available for state highway construction;
    19    4. In federal home loan bank notes and bonds, federal land bank  bonds
    20  and  federal national mortgage association notes, debentures and guaran-
    21  teed certificates of participation, or  the  obligations  of  any  other
    22  government  sponsored  corporation  whose  obligations are or may become
    23  eligible as collateral for advances to member banks as determined by the
    24  board of governors of the federal reserve system;
    25    5. Bankers' acceptances purchased on the secondary market;
    26    6. Negotiable certificates of deposit of any national or state commer-
    27  cial or mutual savings bank or savings and loan association doing  busi-
    28  ness  in  the  United States, provided, the comptroller shall follow the
    29  investment policies and procedures advised by  the  investment  advisory
    30  committee pursuant to subdivision b of section four hundred twenty-three
    31  of the retirement and social security law;
    32    7.  Commercial  paper,  provided that the comptroller shall follow the
    33  investment policies and procedures advised by  the  investment  advisory
    34  committee pursuant to subdivision b of section four hundred twenty-three
    35  of the retirement and social security law.
    36    §  277. Severability. If any clause, sentence, paragraph, subdivision,
    37  section or part of this article shall be adjudged by a court  of  compe-
    38  tent  jurisdiction to be invalid, such judgment shall not affect, impair
    39  or invalidate the remainder thereof, but shall be confined in its opera-
    40  tion to the clause, sentence, paragraph, subdivision, section or part of
    41  this article directly involved in the controversy in which such judgment
    42  shall have been rendered.
    43    § 2. This act shall take effect immediately; provided,  however,  that
    44  section  258  of  the state finance law, as added by section one of this
    45  act shall be deemed repealed April 1, 2026. Effective  immediately,  the
    46  addition,  amendment  and/or  repeal of any rule or regulation necessary
    47  for the implementation of this act on its effective date are  authorized
    48  to be made and completed on or before such effective date.
Establishes the empire state public bank

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