BILL NUMBER:S1140

TITLE OF BILL:  An act to amend the banking law, in relation to
federally chartered banking organizations

PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to expand the authority of the
superintendent of the New York state department of financial services
to obtain detailed information and to conduct meetings concerning the
planned closing of branch offices proposed not only by state-chartered
banking organizations, but also federally chartered banking
organizations.

SUMMARY OF PROVISIONS:

Section one amends section 28-c of the banking law by authorizing the
superintendent of the New York state department of financial services
to obtain detailed information concerning the planned closing of
branch offices by state-chartered and federally chartered banking
organizations, the availability of alternative financial services
within the general area served by such branch and the economic impact
upon the community resulting from such closing, and to provide the
superintendent with authority to conduct meetings with banking
organizations and community groups in areas where a branch closing is
planned.
              

Section two sets forth an immediate effective date.

JUSTIFICATION:

Bank branches serve an essential role in creating and maintaining an
economically vibrant community. A bank branch provides a convenient
and safe place for local residents to deposit their money, accumulate
savings and obtain home and small business loans. In addition, a bank
branch serves to attract businesses to the local neighborhood since
they can deposit business earnings at the end of the day without
having to drive a long distance and easily access safe and trustworthy
lending services. Furthermore, a local branch plays a critical role in
the lives of senior citizens and individuals with limited
transportation options.

For these reasons, a branch closure can have a severe impact upon the
local community. The negative impacts are even more exacerbated in low
and moderate income neighborhoods. According to a study conducted by
the National Community Reinvestment Coalition, from 2007 through 2010,
bank and credit union branches increased by 1,000 in middle- and
upper-income neighborhoods while decreasing by 530 in low- and
moderate-income neighborhoods across the country. In addition,
branches increased in predominantly white neighborhoods by 598 while
decreasing by 186 in minority neighborhoods where more than 50 percent
of the residents are minority.

The disparity in branches and the negative impact resulting from a
branch closure highlight the importance of ensuring that concerns and
input of the local community are taken into consideration in the
decision making process.


Currently, federally-chartered banking organizations are required to
provide advanced notice to an appropriate federal agency and its
customers. However, under the existing federal regulation, the
community does not have the meaningful input in the decision making
process and the federal notice requirement does not go far enough in
addressing the concerns of the community and protecting the interest
of such branch customers.

In comparison to the federal regulation, New York state banking law
imposes more stringent notice requirements upon state-chartered
banking organizations planning to close a branch. Specifically, state
law authorizes the superintendent of the department of financial
services to obtain more comprehensive information, which includes
availability of alternative financial services within the general
area, economic impact upon the community resulting from such closing,
and a description of any planned, limited or full service banking
facility to be opened within such area. In addition, it allows the
superintendent to conduct meetings with banking organizations and
community groups in areas where a branch closing is planned.

This legislation purports to ensure that bank branches are accessible
to all communities by requiring that not only state-chartered, but
federally chartered bank organizations also comply with the relevant
New York state banking law concerning the planned closing of branch
offices.

LEGISLATIVE HISTORY:

None

FISCAL IMPLICATION:

None.

EFFECTIVE DATE:

This legislation shall take effect immediately.