BILL NUMBER:S3260

TITLE OF BILL:  An act to establish a commission to study the
feasibility of establishing a bank owned by the state of New York or
by a public authority constituted by the state of New York; and
providing for the repeal of such provisions upon expiration thereof

PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to
establish a commission to study the feasibility of establishing a bank
owned by the state of New York and report thereon within 2 years.

SUMMARY OF PROVISIONS: Section 1. Creates the New York State
Commission on Establishing a Bank Owned by New York State, known as
the Commission. This study will analyze the feasibility of
establishing, a bank owned by the State of New York or by a public
authority constituted by the State of New York.

Section 2.

a. The Commission should include 15 members:

(i-vi) Six are appointed by the Governor of which, one shall be a
representative of the New York State Banking Department, one shall
represent the New York State Department of Taxation and Finance and
the remaining four shall be employees of the Executive Branch and at
least one must represent the banking and financial industries, and at
              

least one shall represent community banking, and no more than one
member may be a representative of any financial service firm located
within the State; One shall the Comptroller, or his designee; Three
shall be appointed by the Temporary President of the Senate, one of
which must be a Senator; One shall be appointed by the Minority Leader
of the Senate; Three shall be appointed by the Speaker of the
Assembly, one of which must be a member of the Assembly; and one shall
be appointed by the Minority Leader of the Assembly.

b. The Governor shall designate one of his/her appointees to chair the
Commission.

c. The members of the Commission shall be appointed no later than
ninety days after the effective date.

Section 3. This Commission shall:

(i-ix) examine the technical, legal and financial feasibility of
establishing a state-owned bank, including but not limited to the
purpose of infrastructure investments; seek participation in its
deliberations from the President of the Federal Reserve Bank of New
York or the President's designee; evaluate the experiences of other
states with state-owned banks, identifying their performances and
evaluating their lending practices to determine their success in
filling lending caps not filled by the private sector; evaluate the
manner in which public funds are invested or deposited by the State
and its political subdivisions including funds managed by the State
Comptroller including state and local pension funds; examine the
infrastructure investment activities conducted by other states with
state-owned banks; examine the lending practices, including lending to
support infrastructure, of the existing public agencies in the


commonwealth that perform lending service. Any other public authority
in the State that lends money shall cooperate fully with the
Commission and shall supply information reasonably required by the
Commission to carry out its charge; investigate how a State Bank may
promote the agriculture, education, community development, economic
development, commerce and industry within the State; hold at least
three public hearings; and publish its findings and recommendations in
a written report no later than one year after the effective date of
this act.

Section 4. States the effective date of the law.

JUSTIFICATION: This legislation is modeled on 2010 legislation in
Connecticut that created a Task Force to examine the technical, legal,
and financial feasibility of establishing a state-owned bank for
infrastructure purposes. The interest in exploring the feasibility of
state-owned banks has grown because of the recent national fiscal
crisis including the bank bail-outs and ongoing recession, all of
which has had a detrimental impact on every state, particularly New
York.

North Dakota, escaped much of the financial crisis. Many attribute
North Dakota's sound economy to its state-owned bank. The Bank of
North Dakota (Bank) was created in 1919 with the mission of promoting
agriculture, commerce and industry in North Dakota. The State of North
Dakota places all public revenues into the Bank, which are governed by
strict regulations. The Bank was not established to compete with
commercial or community banks so it partners with 100 other financial
institutions to help the North Dakota citizenry. The Bank is an
economic development bank, helping large, small and medium sized
businesses within the state, It also provides student loans and
special assistance to start-ups. The Bank has emerged as a model for
other states because it did not engage in the risky financial
strategies that contributed to the catastrophic bank failures
throughout the country. Many candidates for public office, from both
political parties in states such as Oregon, Illinois, California,
Florida, Idaho, Vermont, and Washington have proposed the
establishment of state-owned banks citing numerous advantages. For
example, state banks are depositories of public funds operating more
conservatively than for-profit banks, eschewing the riskier
moneymaking schemes, State-owned banks have a primary mission to
develop the state and local economy, investing in infrastructure and
providing loans to businesses, not to generate profits for
shareholders.

This legislation creates a Commission with a broad mandate. It will
examine all aspects of a state-owned bank, including how it can
promote the agriculture, education, economic development, commerce and
industry in New York State.

PRIOR LEGISLATIVE HISTORY: A6737 of 2011/2012.

FISCAL IMPLICATIONS: Unknown at this time.

EFFECTIVE DATE: This act shall take effect immediately and shall
expire and be deemed repealed one year after such effective date.