BILL NUMBER:  S2265

 TITLE OF BILL :

An act to amend the public authorities law, in relation to funds of
the state

 PURPOSE :

This bill would prohibit public authorities from depositing their
moneys in a banking institution with a federal Community Reinvestment
Act rating of less than satisfactory.

 SUMMARY OF PROVISIONS :

Section 1 of the bill amends Article 9 of the public authorities law
to specify that notwithstanding any other provision of this chapter,
no public authority or public benefit corporation chartered by The
State of New York shall deposit its moneys in a banking institution to
which the Community Reinvestment Act of 1977, United States P.L.95-128
applies, unless such institution has received a record of performance
no lower than satisfactory.

 JUSTIFICATION :

In 1977, Congress passed the Community Reinvestment Act (CRA), a law
              

that sought to eliminate discriminatory behavior by banks. The CRA
requires banks to meet the financial needs of their communities by
investing in low to moderate-income neighborhoods. One of the CRA's
most powerful tools to spur banks to return capital to the
neighborhoods from which they extracted it, is the CRA's focus upon
neighborhood lending target compliance, and enforcement against banks
that fail to meet federal lending guidelines. The overall goal is to
encourage banks to lend in distressed communities, and by creating
such a pool of liquid funds, to increase economic development, small
business and consumer lending, and homeownership.

A recent report by the Association for Neighborhood and Housing
Development (ANHD) concerning New York City's 17 largest banks reveal
that while deposits grew by more than $452 billion in 2007 and 2008,
these institutions reduced community lending 20.2% or $560 million
dollars. Furthermore, the report concludes that these banks also
reduced their multi-family loans in low-income areas by nearly
twenty-five percent, or $1.3 billion dollars. While this report may be
no more than a window into a problem whose parameters are different
outside of New York City, the dramatic declines in lending portrayed
during a period of consumer credit crisis are distressing and endanger
the prosperity and recovery of New York's communities.

In New York, billions of dollars are held on deposit by public
authorities, commissions and public benefit corporations, and the
deposit or withholding of such funds can act as a power incentive for
CRA compliance. This bill would further enhance CRA compliance by
directing the public authorities continued or created in New York not
to deposit funds in those banks that have not received a CRA rating of
satisfactory or better.

 PRIOR LEGISLATIVE HISTORY :

2015-16: S.2453 - Referred to Corporation, Authorities and Commissions
2013-14: S.2780/A.2058 - Referred to Corporations, Authorities and
Commissions
2011-12: S.2850/A.5947 - Referred to Corporations, Authorities and
Commissions/Referred to Ways and Means
2009-10: S.8507/A.11713 - Referred to Rules/Referred to Corporations

 FISCAL IMPACT ON THE STATE :

None.

 EFFECTIVE DATE :
This act shall take effect on the one hundred-eightieth day after it
shall have become law.