BILL NUMBER:S4305

TITLE OF BILL:

An act to amend the banking law, in relation to deposits of state and
municipal funding in banking institutions

PURPOSE:

To authorize state chartered banking institutions to pledge investment
grade corporate bonds to secure state and municipal deposits.

SUMMARY OF PROVISIONS:

Section 1. The banking law is amended by adding a new section 12-b
which states a state chartered banking institution which holds state
funds or the funds of any political subdivision thereof may accept and
pledge investment grade corporate bonds, to the extend authorized by
the federal reserve bank, as collateral for any discount window
borrowing of such funds. Furthermore, municipal bonds having five or
more years of maturity may be pledged to secure such deposits.

JUSTIFICATION:

The Federal Reserve considers investment grade corporate bonds to be
acceptable collateral for Discount Window borrowings; New York State
              

does not allow them to be pledged as collateral to secure its
municipal deposits. This bill allows state chartered banks to accept
and pledge investment grade corporate bonds as collateral for any
Discount Window borrowing, to the extent allowed by the Federal
Reserve.

Also, New York State collateral requirements state that a bank cannot
pledge municipal bonds as collateral if they mature more than five
years out. The second part of this bill eases the time restrictions on
New York State municipal bonds that are securing the deposits of New
York State's municipalities.

LEGISLATIVE HISTORY:

New legislation.

FISCAL IMPLICATIONS:

To be determined.

EFFECTIVE DATE:

This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.