S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5565
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                May 7, 2019
                                ___________
 
 Introduced  by  Sen. SANDERS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 AN ACT to amend the banking law, the state finance law and  the  general
   municipal law, in relation to the establishment of public banks
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. It is the intent of the Legislature that this  act  author-
 izes  the  lending of public credit to public banks and authorize public
 ownership of stock in public banks for the  purpose  of  achieving  cost
 savings,  strengthening  local  economies, supporting community economic
 development, and addressing infrastructure and housing needs for locali-
 ties.
   § 2. Subdivisions 1 and 11 of section 2 of the banking  law,  subdivi-
 sion  1 as amended by chapter 684 of the laws of 1938 and subdivision 11
 as amended by chapter 154 of the laws of 2007, are amended  to  read  as
 follows:
   1. Bank. The term, "bank," when used in this chapter, unless a differ-
 ent  meaning appears from the context, means any corporation, other than
 a trust company, organized under or subject to the provisions of article
 three OR THREE-C of this chapter.
   11. Banking organizations. The  term,  "banking  organizations,"  when
 used  in  this  chapter,  means and includes all banks, trust companies,
 private bankers, savings banks, safe deposit companies, savings and loan
 associations,  credit  unions,  PUBLIC  BANKS  ORGANIZED  UNDER  ARTICLE
 THREE-C OF THIS CHAPTER, and investment companies.
   § 3. The banking law is amended by adding a new article 3-C to read as
 follows:
                                ARTICLE 3-C
                               PUBLIC BANKS
 SECTION 156. DEFINITIONS.
         156-A. PUBLIC BENEFIT CORPORATIONS.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD10967-01-9

 S. 5565                             2
 
         156-B. INSURANCE.
         156-C. INCONSISTENCY WITH OTHER LAWS.
         156-D. RETAIL SERVICES.
         156-E. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.
   § 156. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
   1.  "LOCAL FINANCIAL INSTITUTION" MEANS A CERTIFIED COMMUNITY DEVELOP-
 MENT FINANCIAL INSTITUTION, A CREDIT UNION, OR A SMALL BANK OR AN INTER-
 MEDIATE SMALL BANK, AS DEFINED IN 12 CFR 25.12.
   2. "PUBLIC BANK" MEANS A CORPORATION, ORGANIZED  FOR  THE  PURPOSE  OF
 ENGAGING  IN THE COMMERCIAL BANKING BUSINESS OR INDUSTRIAL BANKING BUSI-
 NESS, THAT IS WHOLLY OWNED BY A STATE OR LOCAL AUTHORITY AS  DEFINED  BY
 THIS SECTION.
   3.  "STATE  OR  LOCAL AUTHORITY" MEANS A LOCAL GOVERNMENT OR AGENCY, A
 GROUP OF TWO OR MORE LOCAL  GOVERNMENTS  OR  AGENCIES  ACTING  TOGETHER,
 SPECIAL  DISTRICT,  A  GROUP  OF  TWO  OR  MORE SPECIAL DISTRICTS ACTING
 TOGETHER, STATE AGENCY, OR A GROUP OF TWO OR MORE STATE AGENCIES  ACTING
 TOGETHER.
   4.  "SELF-INSURANCE"  MEANS  DEPOSITS  GUARANTEED BY THE OWNERS OF THE
 PUBLIC BANK IN AN AMOUNT APPROVED BY  THE  SUPERINTENDENT  OF  FINANCIAL
 SERVICES.
   §  156-A. PUBLIC BENEFIT CORPORATIONS. 1. A PUBLIC BANK SHALL IDENTIFY
 IN ITS CERTIFICATE OF INCORPORATION A SPECIFIC PUBLIC BENEFIT,  CONSIST-
 ENT WITH THE PROVISIONS OF ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION
 LAW.  EXAMPLES  OF SPECIFIC PUBLIC BENEFITS INCLUDE, BUT ARE NOT LIMITED
 TO, STRENGTHENING LOCAL ECONOMIES, SUPPORTING COMMUNITY ECONOMIC  DEVEL-
 OPMENT,  ADDRESSING INFRASTRUCTURE AND HOUSING NEEDS FOR LOCALITIES, AND
 PROVIDING BANKING SERVICES TO THE UNBANKED OR UNDERBANKED.
   2. A PUBLIC BANK MAY, BUT IS NOT REQUIRED TO, INCORPORATE AS A BENEFIT
 CORPORATION UNDER ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW.
   3. A PUBLIC BANK THAT DOES NOT INCORPORATE AS  A  BENEFIT  CORPORATION
 SHALL  NEVERTHELESS  BE  REQUIRED TO DELIVER AN ANNUAL BENEFIT REPORT IN
 COMPLIANCE WITH SECTION ONE THOUSAND SEVEN HUNDRED EIGHT OF THE BUSINESS
 CORPORATION LAW.
   § 156-B. INSURANCE. A PUBLIC BANK SHALL OBTAIN  AND  MAINTAIN  DEPOSIT
 INSURANCE CONSISTENT WITH SECTION THIRTY-TWO OF THIS CHAPTER.
   §  156-C. INCONSISTENCY WITH OTHER LAWS. 1. A PUBLIC BANK SHALL COMPLY
 WITH ALL REQUIREMENTS OF THIS CHAPTER, THE FINANCIAL SERVICES LAW, STATE
 FINANCE LAW, LOCAL FINANCE LAW, GENERAL MUNICIPAL  LAW,  AND  ALL  OTHER
 RELEVANT  PROVISIONS  OF STATE OR LOCAL LAW, EXCEPT TO THE EXTENT THAT A
 REQUIREMENT OF ANY OF THOSE LAWS IS INCONSISTENT  WITH  A  PROVISION  OF
 THIS  ARTICLE,  IN  WHICH  CASE  THE  PROVISIONS  OF  THIS ARTICLE SHALL
 PREVAIL.
   2. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW,  A  COUNTY  OR
 OTHER STATE OR LOCAL AUTHORITY MAY LEND ITS CREDIT TO ANY PUBLIC BANK.
   3.  NOTWITHSTANDING  ANY PROVISION OF STATE OR LOCAL LAW, ANY STATE OR
 LOCAL AUTHORITY MAY INVEST IN DEBT SECURITIES OR OTHER OBLIGATIONS OF  A
 PUBLIC BANK.
   4.  NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, A PUBLIC BANK
 SHALL BE ELIGIBLE TO RECEIVE STATE OR LOCAL AUTHORITY MONEY.
   § 156-D. RETAIL SERVICES. 1. WHEREVER POSSIBLE, ANY RETAIL SERVICES OF
 A PUBLIC BANK SHALL BE CONDUCTED IN  PARTNERSHIP  WITH  LOCAL  FINANCIAL
 INSTITUTIONS.
   2.  NOTWITHSTANDING  SUBDIVISION  ONE  OF  THIS SECTION, A PUBLIC BANK
 SHALL NOT DO BOTH OF THE FOLLOWING:

 S. 5565                             3
 
   (A) ENGAGE IN  BANKING  ACTIVITIES,  INCLUDING  BUT  NOT  LIMITED  TO,
 INFRASTRUCTURE  LENDING,  WHOLESALE  LENDING, AND PARTICIPATING LENDING;
 AND
   (B)  ENGAGE IN RETAIL ACTIVITIES THAT ARE NOT PROVIDED BY LOCAL FINAN-
 CIAL INSTITUTIONS IN THE JURISDICTION OF THE STATE  OR  LOCAL  AUTHORITY
 THAT OWN THE PUBLIC BANK.
   §  156-E.  OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES. FOR THE
 PURPOSES OF SECTION ONE HUNDRED THIRTY-TWO OF THIS CHAPTER,  ANY  PERSON
 OR ENTITY, INCLUDING A STATE OR LOCAL AUTHORITY, THAT OWNS, CONTROLS, OR
 HOLDS  AN  OWNERSHIP  INTEREST  IN  A  PUBLIC BANK IS NOT A BANK HOLDING
 COMPANY BY REASON OF THAT OWNERSHIP INTEREST.
   § 4. Section 98 of the state finance law is amended by  adding  a  new
 subdivision 7-a to read as follows:
   7-A.  COMMERCIAL  PAPER, DEBT SECURITIES, BONDS, NOTES, OR OTHER OBLI-
 GATIONS OF A PUBLIC BANK, AS DEFINED IN ARTICLE THREE-C OF  THE  BANKING
 LAW.
   § 5. Paragraph d of subdivision 1 of section 10 of the general munici-
 pal  law,  as  amended by chapter 623 of the laws of 1998, is amended to
 read as follows:
   d. "Bank" shall mean a bank OR PUBLIC BANK as defined by  the  banking
 law or a national banking association located and authorized to do busi-
 ness in New York.
   § 6. This act shall take effect immediately.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5565--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                May 7, 2019
                                ___________
 
 Introduced  by Sens. SANDERS, JACKSON, SALAZAR -- read twice and ordered
   printed, and when printed to be committed to the Committee on Banks --
   recommitted to the Committee on Banks in accordance with  Senate  Rule
   6,  sec. 8 -- committee discharged, bill amended, ordered reprinted as
   amended and recommitted to said committee

 AN ACT to amend the banking law, the state finance law and  the  general
   municipal  law, in relation to establishing the "New York public bank-
   ing act"
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "New York public banking act".
   § 2. It is the intent of the legislature that this act (i)  authorizes
 the  lending  of  public  credit  to  public banks and authorizes public
 ownership of stock in public banks for the  purpose  of  achieving  cost
 savings,  strengthening  local  economies, supporting community economic
 development, and addressing infrastructure and housing needs for locali-
 ties; and (ii) codifies the common law interpretation of  the  New  York
 state  constitution  that cities, counties, and other municipalities may
 own stock in and lend money to private  corporations  so  long  as  such
 actions are pursuant to a public purpose.
   §  3.  Subdivisions 1 and 11 of section 2 of the banking law, subdivi-
 sion 1 as amended by chapter 684 of the laws of 1938 and subdivision  11
 as  amended  by  chapter 154 of the laws of 2007, are amended to read as
 follows:
   1. Bank. The term, "bank," when used in this chapter, unless a differ-
 ent meaning appears from the context, means any corporation, other  than
 a trust company, organized under or subject to the provisions of article
 three OR THREE-C of this chapter.
   11.  Banking  organizations.  The  term, "banking organizations," when
 used in this chapter, means and includes  all  banks,  trust  companies,

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD10967-04-0

 S. 5565--A                          2
 
 private bankers, savings banks, safe deposit companies, savings and loan
 associations,  credit  unions,  PUBLIC  BANKS  ORGANIZED  UNDER  ARTICLE
 THREE-C OF THIS CHAPTER, and investment companies.
   § 4. The banking law is amended by adding a new article 3-C to read as
 follows:
                                ARTICLE 3-C
                               PUBLIC BANKS
 SECTION 156. DEFINITIONS.
         156-A. SPONSORS AND CORPORATE STRUCTURE.
         156-B. GOVERNANCE.
         156-C. PUBLIC BANK CHARTER REQUIREMENTS.
         156-D. FINANCIAL AND OPERATIONS FRAMEWORK.
         156-E. PUBLIC BENEFIT CORPORATIONS.
         156-F. INSURANCE.
         156-G. INCONSISTENCY WITH OTHER LAWS.
         156-H. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.
   § 156. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
   1.  "ADVISORY BOARD" MEANS A BOARD ESTABLISHED PURSUANT TO SECTION ONE
 HUNDRED FIFTY-SIX-B OF THIS ARTICLE.
   2. "BANK" MEANS ANY  CORPORATION,  OTHER  THAN  A  TRUST  CORPORATION,
 ORGANIZED  UNDER OR SUBJECT TO THE PROVISIONS OF THIS ARTICLE OR ARTICLE
 THREE OF THIS CHAPTER.
   3. "BOARD" MEANS A BOARD OF DIRECTORS OR BOARD OF MANAGERS OF A PUBLIC
 BANK.
   4. "DEPOSIT" MEANS THE PLACING OF MONEY WITH A PUBLIC BANK TO BE WITH-
 DRAWN UPON THE DEPOSITOR'S DEMAND OR UNDER  THE  RULES  AND  REGULATIONS
 AGREED UPON BETWEEN THE BANK AND THE DEPOSITOR.
   5.  "INDEPENDENT"  MEANS,  WITH RESPECT TO A MEMBER OF A PUBLIC BANK'S
 BOARD OF DIRECTORS, BOARD OF MANAGERS, OR ADVISORY BOARD, AN  INDIVIDUAL
 WHO:
   (A)  AT  THE  TIME  OF  HIS OR HER ELECTION TO THE BOARD OF DIRECTORS,
 BOARD OF MANAGERS, OR ADVISORY BOARD OF A PUBLIC BANK, IS NOT  A  HOLDER
 OF ANY PUBLIC OFFICE WITHIN THE SPONSOR; AND
   (B)  WITHIN THE PAST FIVE YEARS HAS NOT BEEN A HOLDER OF PUBLIC OFFICE
 WITHIN SUCH SPONSOR.
   6. "PUBLIC BANK" MEANS A NOT-FOR-PROFIT CORPORATION,  A  STOCK  CORPO-
 RATION  OR  LIMITED LIABILITY COMPANY THAT IS CHARTERED PURSUANT TO THIS
 ARTICLE AS A BANK.
   7. "PUBLIC BANK APPLICATION  DOCUMENTS"  MEANS  A  BUSINESS  PLAN  AND
 APPLICATION  TO  BE  SUBMITTED TO THE DEPARTMENT PURSUANT TO SECTION ONE
 HUNDRED FIFTY-SIX-C OF THIS ARTICLE FOR  THE  PURPOSE  OF  CHARTERING  A
 PUBLIC BANK.
   8.  "STATE  OR  LOCAL AUTHORITY" MEANS A LOCAL GOVERNMENT OR AGENCY, A
 GROUP OF TWO OR MORE LOCAL  GOVERNMENTS  OR  AGENCIES  ACTING  TOGETHER,
 SPECIAL  DISTRICT,  A  GROUP  OF  TWO  OR  MORE SPECIAL DISTRICTS ACTING
 TOGETHER, STATE AGENCY, OR A GROUP OF TWO OR MORE STATE AGENCIES  ACTING
 TOGETHER.
   9. "SPONSOR" MEANS ONE OR MORE CITIES AND/OR COUNTIES WITHIN THE STATE
 OF NEW YORK.
   §  156-A.  SPONSORS  AND CORPORATE STRUCTURE.   A PUBLIC BANK MAY BE A
 NOT-FOR-PROFIT CORPORATION, A LIMITED LIABILITY COMPANY  OR  CORPORATION
 THAT  IS  FORMED BY A SPONSOR, SUBJECT TO THE FOLLOWING CORPORATE STRUC-
 TURE REQUIREMENTS:
   1. THE SPONSOR SHALL BE (A) THE SOLE MEMBER OF A NOT-FOR-PROFIT PUBLIC
 BANK, (B) THE MAJORITY AND CONTROLLING MEMBER  OF  A  LIMITED  LIABILITY

 S. 5565--A                          3
 
 COMPANY PUBLIC BANK, AND (C) THE MAJORITY AND CONTROLLING SHAREHOLDER OF
 A CORPORATION PUBLIC BANK.
   2.  A  PUBLIC  BANK ORGANIZED AS A LIMITED LIABILITY COMPANY OR CORPO-
 RATION MAY HAVE OTHER MEMBERS OR SHAREHOLDERS BUT SUCH OTHER MEMBERS  OR
 SHAREHOLDERS SHALL ONLY BE PASSIVE MEMBERS OR SHAREHOLDERS AND SHALL NOT
 HAVE  ANY  CONSENT OR VETO RIGHTS OVER ANY DECISIONS, ANY REMOVAL RIGHTS
 OF THE SPONSOR, ANY RIGHTS TO ELECT OR CHOOSE THE BOARD  OR  ANY  VOTING
 RIGHTS WHATSOEVER.
   3.  PASSIVE MEMBERS OR PASSIVE SHAREHOLDERS SHALL BE ALLOWED TO INVEST
 CAPITAL INTO A PUBLIC BANK SO LONG AS SUCH PASSIVE  MEMBERS  OR  PASSIVE
 SHAREHOLDERS  ARE  APPROVED BY THE SPONSOR AND THE SPONSOR MAINTAINS THE
 RIGHT TO DIRECT THE PUBLIC BANK TO PURCHASE THE INTERESTS OF ANY PASSIVE
 MEMBERS OR SHAREHOLDERS AT A MARKET PRICE DETERMINED BY  AN  INDEPENDENT
 THIRD PARTY SELECTED BY THE SPONSOR AT ANY TIME.
   4.  THE  SPONSOR  SHALL  OWE  NO  FIDUCIARY DUTY NOR ANY OTHER DUTY TO
 PASSIVE INVESTORS. NO PASSIVE INVESTOR MAY PURSUE LEGAL  ACTION  AGAINST
 THE  SPONSOR  FOR  ANY  REASON  OTHER  THAN  FAILURE TO DISTRIBUTE FUNDS
 REQUIRED TO BE DISTRIBUTED PURSUANT TO GOVERNING DOCUMENTS OF THE PUBLIC
 BANK.
   § 156-B. GOVERNANCE. 1. THE PUBLIC BANK SHALL BE GOVERNED BY A  BOARD.
 SUCH BOARD SHALL BE COMPOSED OF NO FEWER THAN FIVE DIRECTORS AND NO MORE
 THAN  ELEVEN  DIRECTORS.  EACH  DIRECTOR SHALL LIVE WITHIN THE JURISDIC-
 TIONAL BOUNDARIES OF THE SPONSOR.
   2. THE SPONSOR SHALL DETERMINE THE PUBLIC BANK'S  INITIAL  BOARD,  THE
 TERM  OF  THE  BOARD, THE QUALIFICATIONS OF THE BOARD AND THE METHOD FOR
 REPLACING THE BOARD.
   3. A MAJORITY OF THE BOARD SHALL BE COMPOSED OF INDEPENDENT  DIRECTORS
 WHO  ARE  NOT  GOVERNMENT  EMPLOYEES.  THE CHAIR OF THE BOARD MUST BE AN
 INDEPENDENT DIRECTOR.
   4. THE BOARD SHALL SET POLICY  FOR  THE  PUBLIC  BANK;  PROVIDED  THAT
 NEITHER THE BOARD NOR ANY DIRECTOR SHALL BE INVOLVED IN DAY TO DAY DECI-
 SIONS  REGARDING  PARTICULAR  INSTRUMENTS. MANAGEMENT DECISIONS SHALL BE
 MADE INDEPENDENTLY BY BANK MANAGEMENT WHO  SHALL  BE  APPOINTED  BY  THE
 BOARD CONSISTENT WITH BANK POLICY.
   5. THE BOARD MAY ESTABLISH ONE OR MORE COMMITTEES TO MANAGE THE PUBLIC
 BANK.
   6.  THE  BOARD  SHALL  ADHERE TO ALL REPORTING REQUIREMENTS UNDER THIS
 CHAPTER REGARDING THE PUBLIC BANK'S FINANCIAL CONDITION.
   7. A PUBLIC BANK SHALL FORM ONE OR MORE ADVISORY BOARDS  IN  ORDER  TO
 PROVIDE  ADVICE  AND  CARRY  OUT  ANY OTHER DUTIES, AS DETERMINED BY THE
 PUBLIC BANK, INCLUDING THE FOLLOWING:
   (A) PROVIDE INPUT TO  THE  BOARD  REGARDING  WAYS  TO  ACCOMPLISH  ITS
 MISSION;
   (B)  ENSURE  THAT THE BOARD FOLLOWS STRICT ETHICAL STANDARDS AS DETER-
 MINED BY THE SPONSOR IN THE PUBLIC BANK'S GOVERNING  DOCUMENTS,  THROUGH
 THE APPROVAL OF BYLAWS TO GOVERN THE BOARD'S MANAGEMENT;
   (C) PROVIDE TECHNICAL ADVICE AS NEEDED; AND
   (D)  PROVIDE AN ANNUAL REPORT TO THE PUBLIC AND THE SPONSOR EVALUATING
 THE PUBLIC BANK'S PERFORMANCE IN RELATION TO ITS  MISSION,  ITS  ETHICAL
 STANDARDS AND ITS FINANCIAL SOUNDNESS.
   8.  THE  SPONSOR WILL DETERMINE THE INITIAL ADVISORY BOARD MEMBERSHIP,
 THE TERM OF ITS MEMBERS, THE QUALIFICATIONS OF MEMBERS  AND  THE  METHOD
 FOR  REPLACING  ITS  MEMBERS,  PROVIDED THAT A MAJORITY OF EACH ADVISORY
 BOARD IS MADE UP OF INDEPENDENT MEMBERS WHO ARE NOT GOVERNMENTAL EMPLOY-
 EES. THE ADVISORY BOARD SHALL BE COMPOSED OF NO FEWER THAN FIVE  AND  NO
 MORE  THAN  ELEVEN  MEMBERS. ANY ADVISORY BOARD MEMBER SHALL LIVE WITHIN

 S. 5565--A                          4
 
 THE JURISDICTIONAL BOUNDARY OF THE PUBLIC BANK'S SPONSOR OR ITS  MEMBERS
 OR SHAREHOLDERS.
   9. ANY ACTION REQUIRED OR PERMITTED BY THIS CHAPTER TO BE TAKEN BY THE
 BOARD OR AN ADVISORY BOARD MAY BE TAKEN AT A DULY CALLED MEETING OF SUCH
 BOARD IN ACCORDANCE WITH ITS GOVERNING DOCUMENTS OR WITHOUT A MEETING IF
 THE ACTION TAKEN IS EVIDENCED BY ONE OR MORE WRITTEN CONSENTS DESCRIBING
 THE  ACTION  TAKEN  AND  SIGNED  BY EACH MEMBER OF THE BOARD OR ADVISORY
 BOARD.
   § 156-C. PUBLIC BANK CHARTER REQUIREMENTS. 1. A PROPOSED  PUBLIC  BANK
 SHALL  BE CHARTERED BY THE DEPARTMENT UPON SUBMISSION OF THE PUBLIC BANK
 APPLICATION DOCUMENTS THAT DEMONSTRATE THE FOLLOWING:
   (A) THE PURPOSE OF THE PROPOSED PUBLIC BANK  IS  CONSISTENT  WITH  THE
 PURPOSES REQUIRED UNDER THIS ARTICLE;
   (B)  MINIMUM INITIAL CAPITALIZATION IS NO LESS THAN TEN PERCENT OF THE
 PUBLIC BANK'S PROJECTED LENDING TOTAL FOR THE FIRST  YEAR  OF  OPERATION
 AFTER RECEIPT OF ITS CHARTER;
   (C)  ADEQUATE  RESERVES AND LIQUIDITY EXIST TO COVER THE PUBLIC BANK'S
 OBLIGATIONS RELATING TO DEPOSIT WITHDRAWALS AND DEFAULTED LOANS;
   (D) THE QUALIFICATIONS OF THE PROPOSED DIRECTORS;
   (E) THE QUALIFICATIONS OF THE PROPOSED  CHIEF  EXECUTIVE  OFFICER  AND
 MANAGEMENT TEAM;
   (F) AN ORGANIZATIONAL CHART;
   (G) PROCEDURES FOR OBTAINING FIDELITY INSURANCE;
   (H) SUFFICIENT INTERNAL AUDITS AND CONTROLS;
   (I)  A  PRO  FORMA FINANCIAL STATEMENT PROJECTING ASSETS, LIABILITIES,
 INCOME AND EXPENSES FOR NO LESS THAN A THREE YEAR PERIOD;
   (J) THE IMPACT OF THE PUBLIC BANK ON THE  SPONSOR'S  FINANCIAL  CONDI-
 TION;
   (K)  A  PLAN  TO  COMPLY  WITH THE COMMUNITY REINVESTMENT ACT AND FAIR
 LENDING REQUIREMENTS, PURSUANT TO SECTION TWO  HUNDRED  NINETY-SIX-A  OF
 THE EXECUTIVE LAW;
   (L) A CERTIFICATE OF INCORPORATION; AND
   (M)  A  NARRATIVE  BUSINESS PLAN DESCRIBING THE BANKING SERVICES TO BE
 PROVIDED.
   2. THE PUBLIC BANK MAY BUT SHALL  NOT  BE  REQUIRED  TO  COLLATERALIZE
 DEPOSITS  FROM THE SPONSOR OR ANY OTHER GOVERNMENTAL ENTITY WITH COLLAT-
 ERAL DETERMINED BY THE PUBLIC BANK IN ITS GOVERNING DOCUMENTS.
   3. THE PUBLIC BANK APPLICATION DOCUMENTS ARE NOT REQUIRED  TO  PROVIDE
 THAT THE PUBLIC BANK WILL RECEIVE DEPOSITS IN ITS INITIAL THREE YEARS OF
 OPERATION,  AND  NOT  RECEIVING  DEPOSITS  IN THE INITIAL THREE YEARS OF
 OPERATION SHALL NOT BE A REASON FOR DISAPPROVAL BY THE SUPERINTENDENT.
   4. PUBLIC BANK APPLICATION DOCUMENTS ARE NOT  REQUIRED  TO  INCLUDE  A
 MARKET,  PUBLIC  CONVENIENCE AND ADVANTAGE, COMPETITIVE IMPACT OR A BANK
 PREMISES ANALYSIS OR ADDRESS ANY OTHER MATTERS OTHER THAN  THOSE  LISTED
 IN SUBDIVISION ONE OF THIS SECTION.
   5.  PUBLIC  BANK  CHARTER  APPLICATIONS  THAT DO NOT CONFLICT WITH ANY
 REQUIREMENTS EXPRESSLY PROVIDED IN SUBDIVISION ONE OF THIS SECTION SHALL
 BE LIBERALLY GRANTED BY THE SUPERINTENDENT,  AND  ANY  DECISION  BY  THE
 SUPERINTENDENT  REFUSING  TO  GRANT  PERMISSION  FOR  THE OPERATION OF A
 PUBLIC BANK MAY BE APPEALED BY THE SPONSOR TO THE GOVERNOR WITHIN THIRTY
 DAYS FROM THE DATE OF SUCH DECISION, AND THE  GOVERNOR  SHALL  HAVE  THE
 POWER  TO AFFIRM, REVERSE, OR MODIFY SUCH DECISION BY THE SUPERINTENDENT
 IN THE GOVERNOR'S SOLE DISCRETION.
   § 156-D. FINANCIAL AND OPERATIONS FRAMEWORK. 1. THE  PUBLIC  BANK  MAY
 RAISE CAPITAL THROUGH:
   (A) SPONSOR EQUITY CONTRIBUTIONS,

 S. 5565--A                          5
 
   (B) PASSIVE MEMBER OR SHAREHOLDER EQUITY CONTRIBUTIONS,
   (C) DONATIONS, IF THE PUBLIC BANK IS A NOT-FOR-PROFIT CORPORATION,
   (D) SALE OF CORPORATE DEBT TO SPONSOR,
   (E) SALE OF CORPORATE DEBT TO THIRD PARTIES, AND
   (F) THE RECEIPT AND LEVERAGE OF DEPOSITS.
   2.  THE  PUBLIC BANK SHALL HAVE ALL THE RIGHTS AND POWERS CONFERRED BY
 ARTICLES THREE AND FIFTEEN OF THIS CHAPTER, WHICH MUST BE EXERCISED IN A
 MANNER CONSISTENT WITH ITS MISSION.
   3. WITHIN THE OVERALL  UNDERWRITING  AND  FINANCIAL  POLICIES  OF  THE
 PUBLIC  BANK,  THE  PUBLIC  BANK  SHALL  MAXIMIZE  AND  PRIORITIZE LOANS
 SUPPORTING WORKER COOPERATIVES, COMMUNITY LAND  TRUSTS,  LOW-INCOME  AND
 AFFORDABLE  HOUSING, RENEWABLE ENERGY, INFRASTRUCTURE DEVELOPMENT, SMALL
 BUSINESSES AND SMALL FARMS, MINORITY- AND  WOMEN-OWNED  BUSINESS  ENTER-
 PRISES,  AND  OTHER  INITIATIVES THAT FULFILL THE PUBLIC BANK'S MISSION,
 WITH A FOCUS ON SERVING UNDERSERVED AND UNDER-BANKED COMMUNITIES.
   4. ALL LENDING AND ACTIONS OF THE  PUBLIC  BANK  SHALL  ABIDE  BY  THE
 UNITED NATIONS DECLARATION ON THE RIGHTS OF INDIGENOUS PEOPLES.
   5. THE SPONSOR MAY PROHIBIT INVESTMENTS AND LOANS THAT MAY BENEFIT ANY
 TYPE  OF DESIGNATED BUSINESS INCLUDING THE FOSSIL FUEL INDUSTRY, WEAPONS
 OR GUN MANUFACTURERS, MILITARY SYSTEMS COMPANIES, PRIVATE PRISONS, IMMI-
 GRATION DETENTION FACILITIES, COMPANIES ENGAGED IN OFFSHORE  TAX  AVOID-
 ANCE  OR  EXPLOITATIVE BUSINESS OR LABOR PRACTICES OR THE TOBACCO INDUS-
 TRY, ALL AS DETERMINED BY THE SPONSOR IN  THE  PUBLIC  BANK'S  GOVERNING
 DOCUMENTS.
   6.  THE  PUBLIC BANK SHALL BE EXEMPT FROM STATE, COUNTY, AND MUNICIPAL
 TAXES AND LICENSES, OF ANY KIND, INCLUDING INCOME,  CAPITAL  GAIN,  REAL
 ESTATE AND MORTGAGE RECORDING TAXES.
   7.  THE PUBLIC BANK SHALL NOT BE SOLD TO OR MERGED WITH ANOTHER ENTITY
 UNLESS SUCH ENTITY HAS A PUBLIC BANK CHARTER.
   § 156-E. PUBLIC BENEFIT CORPORATIONS. 1. A PUBLIC BANK MAY, BUT IS NOT
 REQUIRED TO, INCORPORATE AS A BENEFIT CORPORATION UNDER  ARTICLE  SEVEN-
 TEEN OF THE BUSINESS CORPORATION LAW.
   2.  A PUBLIC BANK MAY, BUT IS NOT REQUIRED TO, IDENTIFY IN ITS CERTIF-
 ICATE OF INCORPORATION A SPECIFIC PUBLIC BENEFIT,  CONSISTENT  WITH  THE
 PROVISIONS OF ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW. SPECIF-
 IC  PUBLIC  BENEFITS WITHIN THE MEANING OF THIS SECTION INCLUDE, BUT ARE
 NOT LIMITED TO,  STRENGTHENING  LOCAL  ECONOMIES,  SUPPORTING  COMMUNITY
 ECONOMIC  DEVELOPMENT,  ADDRESSING  INFRASTRUCTURE AND HOUSING NEEDS FOR
 LOCALITIES, AND PROVIDING BANKING SERVICES TO  UNBANKED  OR  UNDERBANKED
 COMMUNITIES.
   §  156-F.  INSURANCE.  A PUBLIC BANK SHALL OBTAIN AND MAINTAIN DEPOSIT
 INSURANCE CONSISTENT WITH SECTION THIRTY-TWO  OF  THIS  CHAPTER  TO  THE
 EXTENT  THAT  IT  ACCEPTS  DEPOSITS  FROM ANY THIRD PARTY THAT IS NOT IN
 EXCESS OF TWO HUNDRED FIFTY THOUSAND DOLLARS.
   § 156-G. INCONSISTENCY WITH OTHER LAWS. 1. A PUBLIC BANK SHALL  COMPLY
 WITH  ALL  REQUIREMENTS OF THIS CHAPTER, THE FINANCIAL SERVICES LAW, THE
 STATE FINANCE LAW, THE LOCAL FINANCE LAW, THE GENERAL MUNICIPAL LAW, THE
 NOT-FOR-PROFIT CORPORATION LAW, AND ALL  OTHER  RELEVANT  PROVISIONS  OF
 STATE  OR  LOCAL  LAW, EXCEPT TO THE EXTENT THAT A REQUIREMENT OF ANY OF
 THOSE LAWS IS INCONSISTENT WITH A PROVISION OF THIS  ARTICLE,  IN  WHICH
 CASE THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL.
   2.  NOTWITHSTANDING  ANY  PROVISION OF STATE OR LOCAL LAW, A COUNTY OR
 OTHER STATE OR LOCAL AUTHORITY MAY LEND ITS CREDIT TO ANY PUBLIC BANK.
   3. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, ANY  STATE  OR
 LOCAL AUTHORITY MAY INVEST IN COMMERCIAL PAPER, DEBT SECURITIES OR OTHER
 OBLIGATIONS OF A PUBLIC BANK.

 S. 5565--A                          6
 
   4.  NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, A PUBLIC BANK
 SHALL BE ELIGIBLE TO RECEIVE STATE AND LOCAL AUTHORITY MONEY.
   §  156-H. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.  FOR THE
 PURPOSES OF SECTION ONE HUNDRED THIRTY-TWO OF THIS CHAPTER, ANY SPONSOR,
 PERSON OR ENTITY, INCLUDING A  STATE  OR  LOCAL  AUTHORITY,  THAT  OWNS,
 CONTROLS,  OR HOLDS AN OWNERSHIP INTEREST IN A PUBLIC BANK IS NOT A BANK
 HOLDING COMPANY BY REASON OF THAT OWNERSHIP INTEREST.
   § 5. Section 98 of the state finance law is amended by  adding  a  new
 subdivision 7-a to read as follows:
   7-A.  COMMERCIAL  PAPER, DEBT SECURITIES, BONDS, NOTES, OR OTHER OBLI-
 GATIONS OF A PUBLIC BANK, AS DEFINED IN ARTICLE THREE-C OF  THE  BANKING
 LAW.
   § 6. Paragraph d of subdivision 1 of section 10 of the general munici-
 pal  law,  as  amended by chapter 623 of the laws of 1998, is amended to
 read as follows:
   d. "Bank" shall mean a bank OR PUBLIC BANK as defined by  the  banking
 law or a national banking association located and authorized to do busi-
 ness in New York.
   § 7. This act shall take effect immediately.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5565--B
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                May 7, 2019
                                ___________
 
 Introduced  by  Sens.  SANDERS, BENJAMIN, BIAGGI, JACKSON, KRUEGER, MAY,
   PARKER, RIVERA, SALAZAR -- read twice and ordered  printed,  and  when
   printed  to  be  committed to the Committee on Banks -- recommitted to
   the Committee on Banks in accordance with Senate Rule  6,  sec.  8  --
   committee  discharged,  bill amended, ordered reprinted as amended and
   recommitted to said committee -- committee discharged,  bill  amended,
   ordered reprinted as amended and recommitted to said committee
 
 AN  ACT  to amend the banking law, the state finance law and the general
   municipal law, in relation to establishing the "New York public  bank-
   ing act"
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "New York public banking act".
   §  2. It is the intent of the legislature that this act (i) authorizes
 the lending of public credit  to  public  banks  and  authorizes  public
 ownership  of  stock  in  public banks for the purpose of achieving cost
 savings, strengthening local economies,  supporting  community  economic
 development, and addressing infrastructure and housing needs for locali-
 ties;  and  (ii)  codifies the common law interpretation of the New York
 state constitution that cities, counties, and other  municipalities  may
 own  stock  in  and  lend  money to private corporations so long as such
 actions are pursuant to a public purpose.
   § 3. Subdivisions 1 and 11 of section 2 of the banking  law,  subdivi-
 sion  1 as amended by chapter 684 of the laws of 1938 and subdivision 11
 as amended by chapter 154 of the laws of 2007, are amended  to  read  as
 follows:
   1. Bank. The term, "bank," when used in this chapter, unless a differ-
 ent  meaning appears from the context, means any corporation, other than
 a trust company, organized under or subject to the provisions of article
 three OR THREE-C of this chapter.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD10967-06-0

 S. 5565--B                          2
 
   11. Banking organizations. The  term,  "banking  organizations,"  when
 used  in  this  chapter,  means and includes all banks, trust companies,
 private bankers, savings banks, safe deposit companies, savings and loan
 associations,  credit  unions,  PUBLIC  BANKS  ORGANIZED  UNDER  ARTICLE
 THREE-C OF THIS CHAPTER, and investment companies.
   § 4. The banking law is amended by adding a new article 3-C to read as
 follows:
                                ARTICLE 3-C
                               PUBLIC BANKS
 SECTION 156. DEFINITIONS.
         156-A. SPONSORS AND CORPORATE STRUCTURE.
         156-B. GOVERNANCE.
         156-C. PUBLIC BANK CHARTER REQUIREMENTS.
         156-D. FINANCIAL AND OPERATIONS FRAMEWORK.
         156-E. PUBLIC BENEFIT CORPORATIONS.
         156-F. INSURANCE.
         156-G. DEPOSIT OF PUBLIC FUNDS.
         156-H. PERMITTED ACTIVITIES OF THE PUBLIC BANK.
         156-I. INCONSISTENCY WITH OTHER LAWS.
         156-J. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.
   § 156. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
   1.  "ADVISORY BOARD" MEANS A BOARD ESTABLISHED PURSUANT TO SECTION ONE
 HUNDRED FIFTY-SIX-B OF THIS ARTICLE.
   2. "BANK" MEANS ANY  CORPORATION,  OTHER  THAN  A  TRUST  CORPORATION,
 ORGANIZED  UNDER OR SUBJECT TO THE PROVISIONS OF THIS ARTICLE OR ARTICLE
 THREE OF THIS CHAPTER.
   3. "BOARD" MEANS A BOARD OF DIRECTORS OR BOARD OF MANAGERS OF A PUBLIC
 BANK.
   4. "DEPOSIT" MEANS THE PLACING OF MONEY WITH A PUBLIC BANK TO BE WITH-
 DRAWN UPON THE DEPOSITOR'S DEMAND OR UNDER  THE  RULES  AND  REGULATIONS
 AGREED UPON BETWEEN THE BANK AND THE DEPOSITOR.
   5.  "ECONOMIC DISTRESSED COMMUNITIES" MEANS THOSE COMMUNITIES WHERE AT
 LEAST THIRTY PERCENT OF RESIDENTS HAVE INCOMES THAT ARE  LESS  THAN  THE
 NATIONAL  POVERTY  LEVEL AND WHERE THE UNEMPLOYMENT RATE IS GREATER THAN
 THE NATIONAL UNEMPLOYMENT RATE OR ECONOMIC OPPORTUNITY ZONES  DESIGNATED
 COMMUNITIES.
   6.  "INDEPENDENT"  MEANS,  WITH RESPECT TO A MEMBER OF A PUBLIC BANK'S
 BOARD OF DIRECTORS, BOARD OF MANAGERS, OR ADVISORY BOARD, AN  INDIVIDUAL
 WHO:
   (A)  AT  THE  TIME  OF  HIS OR HER ELECTION TO THE BOARD OF DIRECTORS,
 BOARD OF MANAGERS, OR ADVISORY BOARD OF A PUBLIC BANK, IS NOT  A  HOLDER
 OF ANY PUBLIC OFFICE WITHIN THE SPONSOR; AND
   (B)  WITHIN THE PAST FIVE YEARS HAS NOT BEEN A HOLDER OF PUBLIC OFFICE
 WITHIN SUCH SPONSOR.
   7. "PUBLIC BANK" MEANS A NOT-FOR-PROFIT CORPORATION,  A  STOCK  CORPO-
 RATION  OR  LIMITED LIABILITY COMPANY THAT IS CHARTERED PURSUANT TO THIS
 ARTICLE AS A BANK.
   8. "PUBLIC BANK APPLICATION  DOCUMENTS"  MEANS  A  BUSINESS  PLAN  AND
 APPLICATION  TO  BE  SUBMITTED TO THE DEPARTMENT PURSUANT TO SECTION ONE
 HUNDRED FIFTY-SIX-C OF THIS ARTICLE FOR  THE  PURPOSE  OF  CHARTERING  A
 PUBLIC BANK.
   9.  "STATE  OR  LOCAL AUTHORITY" MEANS A LOCAL GOVERNMENT OR AGENCY, A
 GROUP OF TWO OR MORE LOCAL  GOVERNMENTS  OR  AGENCIES  ACTING  TOGETHER,
 SPECIAL  DISTRICT,  A  GROUP  OF  TWO  OR  MORE SPECIAL DISTRICTS ACTING
 TOGETHER, STATE AGENCY, OR A GROUP OF TWO OR MORE STATE AGENCIES  ACTING
 TOGETHER.

 S. 5565--B                          3
 
   10.  "SPONSOR"  MEANS  ONE  OR  MORE CITIES AND/OR COUNTIES WITHIN THE
 STATE OF NEW YORK.
   §  156-A.  SPONSORS  AND CORPORATE STRUCTURE.   A PUBLIC BANK MAY BE A
 NOT-FOR-PROFIT CORPORATION, A LIMITED LIABILITY COMPANY  OR  CORPORATION
 THAT  IS  FORMED BY A SPONSOR, SUBJECT TO THE FOLLOWING CORPORATE STRUC-
 TURE REQUIREMENTS:
   1. THE SPONSOR SHALL BE (A) THE SOLE MEMBER OF A NOT-FOR-PROFIT PUBLIC
 BANK, (B) THE MAJORITY AND CONTROLLING MEMBER  OF  A  LIMITED  LIABILITY
 COMPANY PUBLIC BANK, AND (C) THE MAJORITY AND CONTROLLING SHAREHOLDER OF
 A CORPORATION PUBLIC BANK.
   2.  A  PUBLIC  BANK ORGANIZED AS A LIMITED LIABILITY COMPANY OR CORPO-
 RATION MAY HAVE OTHER MEMBERS OR SHAREHOLDERS BUT SUCH OTHER MEMBERS  OR
 SHAREHOLDERS SHALL ONLY BE PASSIVE MEMBERS OR SHAREHOLDERS AND SHALL NOT
 HAVE  ANY  CONSENT OR VETO RIGHTS OVER ANY DECISIONS, ANY REMOVAL RIGHTS
 OF THE SPONSOR, ANY RIGHTS TO ELECT OR CHOOSE THE BOARD  OR  ANY  VOTING
 RIGHTS WHATSOEVER.
   3.  PASSIVE MEMBERS OR PASSIVE SHAREHOLDERS SHALL BE ALLOWED TO INVEST
 CAPITAL INTO A PUBLIC BANK SO LONG AS SUCH PASSIVE  MEMBERS  OR  PASSIVE
 SHAREHOLDERS  ARE  APPROVED BY THE SPONSOR AND THE SPONSOR MAINTAINS THE
 RIGHT TO DIRECT THE PUBLIC BANK TO PURCHASE THE INTERESTS OF ANY PASSIVE
 MEMBERS OR SHAREHOLDERS AT A MARKET PRICE DETERMINED BY  AN  INDEPENDENT
 THIRD PARTY SELECTED BY THE SPONSOR AT ANY TIME.
   4.  THE  SPONSOR  SHALL  OWE  NO  FIDUCIARY DUTY NOR ANY OTHER DUTY TO
 PASSIVE INVESTORS. NO PASSIVE INVESTOR MAY PURSUE LEGAL  ACTION  AGAINST
 THE  SPONSOR  FOR  ANY  REASON  OTHER  THAN  FAILURE TO DISTRIBUTE FUNDS
 REQUIRED TO BE DISTRIBUTED PURSUANT TO GOVERNING DOCUMENTS OF THE PUBLIC
 BANK.
   § 156-B. GOVERNANCE. 1. THE PUBLIC BANK SHALL BE GOVERNED BY A  BOARD.
 SUCH BOARD SHALL BE COMPOSED OF NO FEWER THAN FIVE DIRECTORS AND NO MORE
 THAN  ELEVEN  DIRECTORS.  EACH  DIRECTOR SHALL LIVE WITHIN THE JURISDIC-
 TIONAL BOUNDARIES OF THE SPONSOR.
   2. THE SPONSOR SHALL DETERMINE THE PUBLIC BANK'S  INITIAL  BOARD,  THE
 TERM  OF  THE  BOARD, THE QUALIFICATIONS OF THE BOARD AND THE METHOD FOR
 REPLACING THE BOARD.
   3. A MAJORITY OF THE BOARD SHALL BE COMPOSED OF INDEPENDENT  DIRECTORS
 WHO  ARE  NOT  GOVERNMENT  EMPLOYEES.  THE CHAIR OF THE BOARD MUST BE AN
 INDEPENDENT DIRECTOR.
   4. THE BOARD SHALL SET POLICY  FOR  THE  PUBLIC  BANK;  PROVIDED  THAT
 NEITHER THE BOARD NOR ANY DIRECTOR SHALL BE INVOLVED IN DAY TO DAY DECI-
 SIONS  REGARDING  PARTICULAR  INSTRUMENTS. MANAGEMENT DECISIONS SHALL BE
 MADE INDEPENDENTLY BY BANK MANAGEMENT WHO  SHALL  BE  APPOINTED  BY  THE
 BOARD CONSISTENT WITH BANK POLICY.
   5. THE BOARD MAY ESTABLISH ONE OR MORE COMMITTEES TO MANAGE THE PUBLIC
 BANK.
   6.  THE  BOARD  SHALL  ADHERE TO ALL REPORTING REQUIREMENTS UNDER THIS
 CHAPTER REGARDING THE PUBLIC BANK'S FINANCIAL CONDITION.
   7. A PUBLIC BANK SHALL FORM ONE OR MORE ADVISORY BOARDS  IN  ORDER  TO
 PROVIDE  ADVICE  AND  CARRY  OUT  ANY OTHER DUTIES, AS DETERMINED BY THE
 PUBLIC BANK, INCLUDING THE FOLLOWING:
   (A) PROVIDE INPUT TO  THE  BOARD  REGARDING  WAYS  TO  ACCOMPLISH  ITS
 MISSION;
   (B)  ENSURE  THAT THE BOARD FOLLOWS STRICT ETHICAL STANDARDS AS DETER-
 MINED BY THE SPONSOR IN THE PUBLIC BANK'S GOVERNING  DOCUMENTS,  THROUGH
 THE APPROVAL OF BYLAWS TO GOVERN THE BOARD'S MANAGEMENT;
   (C) PROVIDE TECHNICAL ADVICE AS NEEDED; AND

 S. 5565--B                          4
 
   (D)  PROVIDE AN ANNUAL REPORT TO THE PUBLIC AND THE SPONSOR EVALUATING
 THE PUBLIC BANK'S PERFORMANCE IN RELATION TO ITS  MISSION,  ITS  ETHICAL
 STANDARDS AND ITS FINANCIAL SOUNDNESS.
   8.  THE  SPONSOR WILL DETERMINE THE INITIAL ADVISORY BOARD MEMBERSHIP,
 THE TERM OF ITS MEMBERS, THE QUALIFICATIONS OF MEMBERS  AND  THE  METHOD
 FOR  REPLACING  ITS  MEMBERS,  PROVIDED THAT A MAJORITY OF EACH ADVISORY
 BOARD IS MADE UP OF INDEPENDENT MEMBERS WHO ARE NOT GOVERNMENTAL EMPLOY-
 EES. THE ADVISORY BOARD SHALL BE COMPOSED OF NO FEWER THAN FIVE  AND  NO
 MORE  THAN  ELEVEN  MEMBERS. ANY ADVISORY BOARD MEMBER SHALL LIVE WITHIN
 THE JURISDICTIONAL BOUNDARY OF THE PUBLIC BANK'S SPONSOR OR ITS  MEMBERS
 OR SHAREHOLDERS.
   9. ANY ACTION REQUIRED OR PERMITTED BY THIS CHAPTER TO BE TAKEN BY THE
 BOARD OR AN ADVISORY BOARD MAY BE TAKEN AT A DULY CALLED MEETING OF SUCH
 BOARD IN ACCORDANCE WITH ITS GOVERNING DOCUMENTS OR WITHOUT A MEETING IF
 THE ACTION TAKEN IS EVIDENCED BY ONE OR MORE WRITTEN CONSENTS DESCRIBING
 THE  ACTION  TAKEN  AND  SIGNED  BY EACH MEMBER OF THE BOARD OR ADVISORY
 BOARD.
   § 156-C. PUBLIC BANK CHARTER REQUIREMENTS. 1. A PROPOSED  PUBLIC  BANK
 SHALL  BE CHARTERED BY THE DEPARTMENT UPON SUBMISSION OF THE PUBLIC BANK
 APPLICATION DOCUMENTS THAT DEMONSTRATE THE FOLLOWING:
   (A) THE PURPOSE OF THE PROPOSED PUBLIC BANK  IS  CONSISTENT  WITH  THE
 PURPOSES REQUIRED UNDER THIS ARTICLE;
   (B)  MINIMUM INITIAL CAPITALIZATION IS NO LESS THAN TEN PERCENT OF THE
 PUBLIC BANK'S PROJECTED LENDING TOTAL FOR THE FIRST  YEAR  OF  OPERATION
 AFTER RECEIPT OF ITS CHARTER;
   (C)  ADEQUATE  RESERVES AND LIQUIDITY EXIST TO COVER THE PUBLIC BANK'S
 OBLIGATIONS RELATING TO DEPOSIT WITHDRAWALS AND DEFAULTED LOANS;
   (D) THE QUALIFICATIONS OF THE PROPOSED DIRECTORS;
   (E) THE QUALIFICATIONS OF THE PROPOSED  CHIEF  EXECUTIVE  OFFICER  AND
 MANAGEMENT TEAM;
   (F) AN ORGANIZATIONAL CHART;
   (G) PROCEDURES FOR OBTAINING FIDELITY INSURANCE;
   (H) SUFFICIENT INTERNAL AUDITS AND CONTROLS;
   (I)  A  PRO  FORMA FINANCIAL STATEMENT PROJECTING ASSETS, LIABILITIES,
 INCOME AND EXPENSES FOR NO LESS THAN A THREE YEAR PERIOD;
   (J) THE IMPACT OF THE PUBLIC BANK ON THE  SPONSOR'S  FINANCIAL  CONDI-
 TION;
   (K)  A  PLAN  TO  COMPLY  WITH THE COMMUNITY REINVESTMENT ACT AND FAIR
 LENDING REQUIREMENTS, PURSUANT TO SECTION TWO  HUNDRED  NINETY-SIX-A  OF
 THE EXECUTIVE LAW;
   (L) A CERTIFICATE OF INCORPORATION; AND
   (M)  A  NARRATIVE  BUSINESS PLAN DESCRIBING THE BANKING SERVICES TO BE
 PROVIDED.
   2. THE PUBLIC BANK MAY BUT SHALL  NOT  BE  REQUIRED  TO  COLLATERALIZE
 DEPOSITS  FROM THE SPONSOR OR ANY OTHER GOVERNMENTAL ENTITY WITH COLLAT-
 ERAL DETERMINED BY THE PUBLIC BANK IN ITS GOVERNING DOCUMENTS.
   3. THE PUBLIC BANK APPLICATION DOCUMENTS ARE NOT REQUIRED  TO  PROVIDE
 THAT THE PUBLIC BANK WILL RECEIVE DEPOSITS IN ITS INITIAL THREE YEARS OF
 OPERATION,  AND  NOT  RECEIVING  DEPOSITS  IN THE INITIAL THREE YEARS OF
 OPERATION SHALL NOT BE A REASON FOR DISAPPROVAL BY THE SUPERINTENDENT.
   4. PUBLIC BANK APPLICATION DOCUMENTS ARE NOT  REQUIRED  TO  INCLUDE  A
 MARKET,  PUBLIC  CONVENIENCE AND ADVANTAGE, COMPETITIVE IMPACT OR A BANK
 PREMISES ANALYSIS OR ADDRESS ANY OTHER MATTERS OTHER THAN  THOSE  LISTED
 IN SUBDIVISION ONE OF THIS SECTION.
   5.  PUBLIC  BANK  CHARTER  APPLICATIONS  THAT DO NOT CONFLICT WITH ANY
 REQUIREMENTS EXPRESSLY PROVIDED IN SUBDIVISION ONE OF THIS SECTION SHALL

 S. 5565--B                          5
 
 BE LIBERALLY GRANTED BY THE SUPERINTENDENT,  AND  ANY  DECISION  BY  THE
 SUPERINTENDENT  REFUSING  TO  GRANT  PERMISSION  FOR  THE OPERATION OF A
 PUBLIC BANK MAY BE APPEALED BY THE SPONSOR TO THE GOVERNOR WITHIN THIRTY
 DAYS  FROM  THE  DATE  OF SUCH DECISION, AND THE GOVERNOR SHALL HAVE THE
 POWER TO AFFIRM, REVERSE, OR MODIFY SUCH DECISION BY THE  SUPERINTENDENT
 IN THE GOVERNOR'S SOLE DISCRETION.
   §  156-D.  FINANCIAL  AND OPERATIONS FRAMEWORK. 1. THE PUBLIC BANK MAY
 RAISE CAPITAL THROUGH:
   (A) SPONSOR EQUITY CONTRIBUTIONS,
   (B) PASSIVE MEMBER OR SHAREHOLDER EQUITY CONTRIBUTIONS,
   (C) DONATIONS, IF THE PUBLIC BANK IS A NOT-FOR-PROFIT CORPORATION,
   (D) SALE OF CORPORATE DEBT TO SPONSOR,
   (E) SALE OF CORPORATE DEBT TO THIRD PARTIES, AND
   (F) THE RECEIPT AND LEVERAGE OF DEPOSITS.
   2. THE PUBLIC BANK SHALL HAVE ALL THE RIGHTS AND POWERS  CONFERRED  BY
 ARTICLES THREE AND FIFTEEN OF THIS CHAPTER, WHICH MUST BE EXERCISED IN A
 MANNER CONSISTENT WITH ITS MISSION.
   3.  WITHIN  THE  OVERALL  UNDERWRITING  AND  FINANCIAL POLICIES OF THE
 PUBLIC BANK,  THE  PUBLIC  BANK  SHALL  MAXIMIZE  AND  PRIORITIZE  LOANS
 SUPPORTING  WORKER  COOPERATIVES,  COMMUNITY LAND TRUSTS, LOW-INCOME AND
 AFFORDABLE HOUSING, RENEWABLE ENERGY, INFRASTRUCTURE DEVELOPMENT,  SMALL
 BUSINESSES  AND  SMALL  FARMS, MINORITY- AND WOMEN-OWNED BUSINESS ENTER-
 PRISES, AND OTHER INITIATIVES THAT FULFILL THE  PUBLIC  BANK'S  MISSION,
 WITH A FOCUS ON SERVING UNDERSERVED AND UNDER-BANKED COMMUNITIES.
   4.  ALL  LENDING  AND  ACTIONS  OF  THE PUBLIC BANK SHALL ABIDE BY THE
 UNITED NATIONS DECLARATION ON THE RIGHTS OF INDIGENOUS PEOPLES.
   5. THE SPONSOR MAY PROHIBIT INVESTMENTS AND LOANS THAT MAY BENEFIT ANY
 TYPE OF DESIGNATED BUSINESS INCLUDING THE FOSSIL FUEL INDUSTRY,  WEAPONS
 OR GUN MANUFACTURERS, MILITARY SYSTEMS COMPANIES, PRIVATE PRISONS, IMMI-
 GRATION  DETENTION  FACILITIES, COMPANIES ENGAGED IN OFFSHORE TAX AVOID-
 ANCE OR EXPLOITATIVE BUSINESS OR LABOR PRACTICES OR THE  TOBACCO  INDUS-
 TRY,  ALL  AS  DETERMINED  BY THE SPONSOR IN THE PUBLIC BANK'S GOVERNING
 DOCUMENTS.
   6. THE PUBLIC BANK SHALL BE EXEMPT FROM STATE, COUNTY,  AND  MUNICIPAL
 TAXES  AND  LICENSES,  OF ANY KIND, INCLUDING INCOME, CAPITAL GAIN, REAL
 ESTATE AND MORTGAGE RECORDING TAXES.
   7. THE PUBLIC BANK SHALL NOT BE SOLD TO OR MERGED WITH ANOTHER  ENTITY
 UNLESS SUCH ENTITY HAS A PUBLIC BANK CHARTER.
   § 156-E. PUBLIC BENEFIT CORPORATIONS. 1. A PUBLIC BANK MAY, BUT IS NOT
 REQUIRED  TO,  INCORPORATE AS A BENEFIT CORPORATION UNDER ARTICLE SEVEN-
 TEEN OF THE BUSINESS CORPORATION LAW.
   2. A PUBLIC BANK MAY, BUT IS NOT REQUIRED TO, IDENTIFY IN ITS  CERTIF-
 ICATE  OF  INCORPORATION  A SPECIFIC PUBLIC BENEFIT, CONSISTENT WITH THE
 PROVISIONS OF ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW. SPECIF-
 IC PUBLIC BENEFITS WITHIN THE MEANING OF THIS SECTION INCLUDE,  BUT  ARE
 NOT  LIMITED  TO,  STRENGTHENING  LOCAL  ECONOMIES, SUPPORTING COMMUNITY
 ECONOMIC DEVELOPMENT, ADDRESSING INFRASTRUCTURE AND  HOUSING  NEEDS  FOR
 LOCALITIES,  AND  PROVIDING  BANKING SERVICES TO UNBANKED OR UNDERBANKED
 COMMUNITIES.
   § 156-F. INSURANCE. A PUBLIC BANK SHALL OBTAIN  AND  MAINTAIN  DEPOSIT
 INSURANCE  CONSISTENT  WITH  SECTION  THIRTY-TWO  OF THIS CHAPTER TO THE
 EXTENT THAT IT ACCEPTS DEPOSITS FROM ANY THIRD  PARTY  THAT  IS  NOT  IN
 EXCESS OF TWO HUNDRED FIFTY THOUSAND DOLLARS.
   §  156-G.  DEPOSIT  OF PUBLIC FUNDS. 1. THE PUBLIC BANK SHALL SERVE AS
 THE DEPOSITORY FOR PUBLIC DEPOSITS ONCE THE PUBLIC BANK HAS BUILT SUFFI-
 CIENT CAPACITY TO ACCEPT AND MANAGE PUBLIC DEPOSITS AS DETERMINED BY THE

 S. 5565--B                          6
 
 COMMISSION. THE COMMISSION SHALL ESTABLISH A PROCESS AND TIME FRAME  FOR
 THE DEPOSIT OF PUBLIC MONEYS INTO THE PUBLIC BANK.
   2.  THE  COMPTROLLER  OR  CHIEF  FINANCIAL OFFICER OF THE MUNICIPALITY
 SHALL DEPOSIT PUBLIC MONEYS IN THE PUBLIC BANK IN  ACCORDANCE  WITH  THE
 TIME  FRAME  AND  GUIDELINES  DETERMINED  BY  THE  COMMISSION UNDER THIS
 SECTION.
   (A) ALL DEPOSITS IN THE PUBLIC BANK  ARE  GUARANTEED  BY  THE  MUNICI-
 PALITY.
   (B)  ALL  INCOME  EARNED  BY THE PUBLIC BANK ON PUBLIC MONEYS THAT ARE
 DEPOSITED IN OR INVESTED WITH THE PUBLIC BANK MUST BE  CREDITED  TO  AND
 BECOME A PART OF THE REVENUES AND INCOME OF THE PUBLIC BANK.
   (C)  THE PUBLIC BANK MAY ACCEPT DEPOSITS OF PUBLIC FUNDS, BUT SHALL BE
 EXEMPT FROM THE REQUIREMENTS OF SECTION ONE HUNDRED FIVE OF  THIS  CHAP-
 TER.
   (D) THE PUBLIC BANK MAY ACCEPT FUNDS FROM ANY SOURCE, INCLUDING FEDER-
 AL FUNDS OR OTHER PUBLIC FUNDS.
   (E)  THE  COMMISSION  SHALL  REVIEW MUNICIPALITY ACCOUNTS THAT CONTAIN
 PUBLIC FUNDS THAT ARE NOT PUBLIC MONEYS, AND MAKE RECOMMENDATIONS TO THE
 EXECUTIVE AND THE APPROPRIATE COMMITTEES OF THE LEGISLATIVE BODY OF  THE
 MUNICIPALITY AS TO WHICH ACCOUNTS SHOULD BE DEPOSITED IN THE BANK.
   (F) THE BANK SHALL MAKE DISBURSEMENTS TO THE PUBLIC FUNDS AS NECESSARY
 FOR THE FUNCTION OF GOVERNMENT.
   §  156-H.  PERMITTED  ACTIVITIES  OF THE PUBLIC BANK. 1. INVESTMENT OF
 PUBLIC MONEYS. THE PUBLIC BANK MAY INVEST  PUBLIC  MONEYS  DEPOSITED  IN
 SUCH  BANK  THAT ARE NOT REASONABLY EXPECTED TO BE NECESSARY TO MEET THE
 SHORT OR INTERMEDIATE-TERM LIQUIDITY  NEEDS  OF  THE  MUNICIPALITY.  THE
 COMPTROLLER  OR CHIEF FINANCIAL OFFICER OF THE MUNICIPALITY SHALL RETAIN
 AUTHORITY TO MANAGE AND INVEST THE AMOUNT OF FUNDS NECESSARY TO MEET THE
 OPERATIONAL NEEDS OF SUCH MUNICIPALITY.
   2. INFRASTRUCTURE LOANS. THE PUBLIC BANK IS AUTHORIZED  TO  FACILITATE
 INVESTMENT  IN, AND FINANCING OF, CONSTRUCTION, REHABILITATION, REPLACE-
 MENT, AND IMPROVEMENT OF NEW AND EXISTING PUBLIC INFRASTRUCTURE SYSTEMS.
 BEFORE INITIATING OPERATIONS, THE COMMISSION MUST PRESENT AN IMPLEMENTA-
 TION PLAN AND ANY NECESSARY LEGISLATION TO THE EXECUTIVE AND APPROPRIATE
 LEGISLATIVE COMMITTEES OF THE MUNICIPALITY, THAT:
   (A) IDENTIFIES THE PUBLIC INFRASTRUCTURE SYSTEMS THE PUBLIC BANK PLANS
 TO TARGET INITIALLY;
   (B) IDENTIFIES ANY EXISTING MUNICIPAL PROGRAMS THAT  THE  PUBLIC  BANK
 RECOMMENDS  BE  TRANSFERRED  UNDER ITS UMBRELLA, AND THE STEPS AND TIME-
 LINES FOR SUCH TRANSITIONS;
   (C) DESCRIBES ADDITIONAL FINANCING PRODUCTS AND  SERVICES  THE  PUBLIC
 BANK  PLANS  TO OFFER, THE TARGET MARKETS, ANTICIPATED RATES, TERMS, AND
 CONDITIONS;
   (D) DEMONSTRATES HOW PUBLIC BANK PRODUCTS AND SERVICES  WILL  INCREASE
 ACCESS TO CAPITAL FOR PUBLIC INFRASTRUCTURE SYSTEMS AND COMPLEMENT THOSE
 OF EXISTING PUBLIC AND PRIVATE SOURCES; AND
   (E)  DEMONSTRATES  HOW  THE PUBLIC BANK PLANS TO MAXIMIZE REVENUES AND
 PUBLIC BENEFIT.
   3. STUDENT LOANS. THE  PUBLIC  BANK  IS  AUTHORIZED  TO  ADMINISTER  A
 GOVERNMENT GUARANTEE LOAN PROGRAM TO ASSIST STUDENTS IN NEED OF LOW-COST
 STUDENT  LOANS AND RELATED LOAN BENEFITS TO ADDRESS EDUCATIONAL NEEDS AS
 NECESSARY TO SUPPORT STUDENT SUCCESS. THE COMMISSION  SHALL  DEVELOP  AN
 IMPLEMENTATION PLAN THAT:
   (A)  IDENTIFIES  THE  NEEDS AND BENEFITS TO SELECTED STUDENTS THAT THE
 PROGRAM WILL TARGET INITIALLY;

 S. 5565--B                          7
 
   (B) DEMONSTRATES HOW THE PUBLIC BANK PLANS TO  MAXIMIZE  REVENUES  AND
 PUBLIC BENEFIT WHILE MINIMIZING PUBLIC RISK;
   (C)  DEMONSTRATES  HOW THE PUBLIC BANK WILL COORDINATE WITH OFFICES OF
 STUDENT FINANCIAL ASSISTANCE; AND
   (D) IDENTIFIES WAYS THAT  SUCH  PROGRAM  WILL  ADDRESS  THE  FOLLOWING
 ISSUES RELATED TO LOANS:
   (I) QUALIFICATION CRITERIA FOR STUDENTS;
   (II) OBLIGATIONS AND OPTIONS FOR LOAN REPAYMENT;
   (III) REQUIREMENTS FOR LOAN GUARANTEES AND RESERVES;
   (IV) FEE AND INTEREST RATE STRUCTURE;
   (V) MAXIMUM LOAN AMOUNTS; AND
   (VI)  ENSURING  STUDENT  AWARENESS OF GRANTS, FEDERAL LOANS, AND OTHER
 FINANCIAL AID PROGRAMS.
   4. SMALL BUSINESS, MINORITY- AND WOMEN-OWNED BUSINESS ENTERPRISES  AND
 FARMERS. (A) THE PUBLIC BANK IS AUTHORIZED TO LEVERAGE THIRTY PERCENT OF
 PUBLIC  DEPOSITS AS FINANCIAL CAPITAL AND RESOURCES TO PROVIDE ACCESS TO
 LOW-COST CAPITAL AND/OR CREDIT TO  MINORITY-  AND  WOMEN-OWNED  BUSINESS
 ENTERPRISES,  ENTREPRENEURS,  START-UP  BUSINESSES,  AND  BELOW  AVERAGE
 INCOME COMMUNITIES  AND  INDIVIDUALS  OF  THE  MUNICIPALITY  TO  FURTHER
 ECONOMIC GROWTH, AND CREATE JOBS.
   (B)  THE  PUBLIC  BANK IS AUTHORIZED TO LEVERAGE ITS FINANCIAL CAPITAL
 AND RESOURCES TO PROVIDE ACCESS TO LOW-COST  CAPITAL  AND/OR  CREDIT  TO
 BRING FISCALLY SOUND AND FINANCIALLY SUCCESSFUL BUSINESSES.
   (C)  THE  PUBLIC  BANK IS AUTHORIZED TO LEVERAGE ITS FINANCIAL CAPITAL
 AND RESOURCES TO PROVIDE ACCESS TO LOW-COST  CAPITAL  AND/OR  CREDIT  TO
 ESTABLISHED  BUSINESSES  WITHIN  THE  MUNICIPALITY  FOR  THE  PURPOSE OF
 PROVIDING FINANCIAL STABILITY FOR SUCH BANK AS PROVIDED FOR  UNDER  THIS
 SECTION.
   5.  FARM  SUBSIDY  ASSISTANCE.  (A)  THE  PUBLIC BANK IS AUTHORIZED TO
 LEVERAGE ITS PUBLIC DEPOSITS  AS  FINANCIAL  CAPITAL  AND  RESOURCES  TO
 PROVIDE  ACCESS  TO  LOW-COST CAPITAL AND/OR CREDIT TO FARMERS AND BELOW
 AVERAGE INCOME COMMUNITIES AND INDIVIDUALS WITHIN  THE  MUNICIPALITY  TO
 FURTHER  ECONOMIC GROWTH, CREATE JOBS AND BUILD AND SUSTAIN A PRODUCTIVE
 ECONOMY FOR THE RESIDENTS OF SUCH MUNICIPALITY.
   (B) THE PUBLIC BANK IS AUTHORIZED TO LEVERAGE  ITS  FINANCIAL  CAPITAL
 AND  RESOURCES  TO  PROVIDE ACCESS TO LOW-COST CAPITAL TO BRING FISCALLY
 SOUND AND FINANCIALLY SUCCESSFUL BUSINESSES INTO THE MUNICIPALITY.
   (C) THE PUBLIC BANK IS AUTHORIZED TO LEVERAGE  ITS  FINANCIAL  CAPITAL
 AND  RESOURCES  TO  PROVIDE  ACCESS TO LOW-COST CAPITAL AND/OR CREDIT TO
 ESTABLISHED FARM BUSINESSES IN  THE  MUNICIPALITY  FOR  THE  PURPOSE  OF
 PROVIDING  FINANCIAL  STABILITY FOR SUCH BANK AS PROVIDED FOR UNDER THIS
 SECTION.
   6. AFFORDABLE HOUSING. THE PUBLIC BANK IS AUTHORIZED TO  LEVERAGE  ITS
 PUBLIC  DEPOSITS AS FINANCIAL CAPITAL AND RESOURCES TO PROVIDE ACCESS TO
 LOW-COST CAPITAL AND/OR CREDIT TO FUND PROJECTS THAT PROVIDE  AFFORDABLE
 HOUSING  FOR RESIDENTS, PARTICULARLY IN ECONOMICALLY DISTRESSED COMMUNI-
 TIES OR BELOW  AVERAGE  INCOME  COMMUNITIES  WITHIN  A  MUNICIPALITY  TO
 FURTHER  ECONOMIC GROWTH, CREATE JOBS AND BUILD AND SUSTAIN A PRODUCTIVE
 ECONOMY FOR THE RESIDENTS OF SUCH MUNICIPALITY.
   § 156-I. INCONSISTENCY WITH OTHER LAWS. 1. A PUBLIC BANK SHALL  COMPLY
 WITH  ALL  REQUIREMENTS OF THIS CHAPTER, THE FINANCIAL SERVICES LAW, THE
 STATE FINANCE LAW, THE LOCAL FINANCE LAW, THE GENERAL MUNICIPAL LAW, THE
 NOT-FOR-PROFIT CORPORATION LAW, AND ALL  OTHER  RELEVANT  PROVISIONS  OF
 STATE  OR  LOCAL  LAW, EXCEPT TO THE EXTENT THAT A REQUIREMENT OF ANY OF
 THOSE LAWS IS INCONSISTENT WITH A PROVISION OF THIS  ARTICLE,  IN  WHICH
 CASE THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL.

 S. 5565--B                          8
 
   2.  NOTWITHSTANDING  ANY  PROVISION OF STATE OR LOCAL LAW, A COUNTY OR
 OTHER STATE OR LOCAL AUTHORITY MAY LEND ITS CREDIT TO ANY PUBLIC BANK.
   3.  NOTWITHSTANDING  ANY PROVISION OF STATE OR LOCAL LAW, ANY STATE OR
 LOCAL AUTHORITY MAY INVEST IN COMMERCIAL PAPER, DEBT SECURITIES OR OTHER
 OBLIGATIONS OF A PUBLIC BANK.
   4. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, A PUBLIC  BANK
 SHALL BE ELIGIBLE TO RECEIVE STATE AND LOCAL AUTHORITY MONEY.
   §  156-J. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.  FOR THE
 PURPOSES OF SECTION ONE HUNDRED THIRTY-TWO OF THIS CHAPTER, ANY SPONSOR,
 PERSON OR ENTITY, INCLUDING A  STATE  OR  LOCAL  AUTHORITY,  THAT  OWNS,
 CONTROLS,  OR HOLDS AN OWNERSHIP INTEREST IN A PUBLIC BANK IS NOT A BANK
 HOLDING COMPANY BY REASON OF THAT OWNERSHIP INTEREST.
   § 5. Section 98 of the state finance law is amended by  adding  a  new
 subdivision 7-a to read as follows:
   7-A.  COMMERCIAL  PAPER, DEBT SECURITIES, BONDS, NOTES, OR OTHER OBLI-
 GATIONS OF A PUBLIC BANK, AS DEFINED IN ARTICLE THREE-C OF  THE  BANKING
 LAW.
   § 6. Paragraph d of subdivision 1 of section 10 of the general munici-
 pal  law,  as  amended by chapter 623 of the laws of 1998, is amended to
 read as follows:
   d. "Bank" shall mean a bank OR PUBLIC BANK as defined by  the  banking
 law or a national banking association located and authorized to do busi-
 ness in New York.
   § 7. This act shall take effect immediately.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5565--D
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                May 7, 2019
                                ___________
 
 Introduced by Sens. SANDERS, BAILEY, BENJAMIN, BIAGGI, CARLUCCI, COMRIE,
   HOYLMAN,  JACKSON,  KRUEGER,  MAY,  MONTGOMERY, PARKER, RAMOS, RIVERA,
   SALAZAR, SKOUFIS -- read twice and ordered printed, and  when  printed
   to  be  committed  to  the  Committee  on  Banks -- recommitted to the
   Committee on Banks in accordance with Senate Rule 6, sec. 8 -- commit-
   tee discharged, bill amended, ordered reprinted as amended and  recom-
   mitted  to  said  committee  --  committee  discharged,  bill amended,
   ordered reprinted as amended and  recommitted  to  said  committee  --
   committee  discharged,  bill amended, ordered reprinted as amended and
   recommitted to said committee -- committee discharged,  bill  amended,
   ordered reprinted as amended and recommitted to said committee
 
 AN  ACT  to amend the banking law, the state finance law and the general
   municipal law, in relation to establishing the "New York public  bank-
   ing act"
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "New York public banking act".
   §  2. It is the intent of the legislature that this act (i) authorizes
 the lending of public credit  to  public  banks  and  authorizes  public
 ownership  of  stock  in  public banks for the purpose of achieving cost
 savings, strengthening local economies,  supporting  community  economic
 development, and addressing infrastructure and housing needs for locali-
 ties;  and  (ii)  codifies the common law interpretation of the New York
 state constitution that cities, counties, and other  municipalities  may
 own  stock  in  and  lend  money to private corporations so long as such
 actions are pursuant to a public purpose.
   § 3. Subdivisions 1 and 11 of section 2 of the banking  law,  subdivi-
 sion  1 as amended by chapter 684 of the laws of 1938 and subdivision 11
 as amended by chapter 154 of the laws of 2007, are amended  to  read  as
 follows:

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD10967-13-0

 S. 5565--D                          2
 
   1. Bank. The term, "bank," when used in this chapter, unless a differ-
 ent  meaning appears from the context, means any corporation, other than
 a trust company, organized under or subject to the provisions of article
 three OR THREE-C of this chapter.
   11.  Banking  organizations.  The  term, "banking organizations," when
 used in this chapter, means and includes  all  banks,  trust  companies,
 private bankers, savings banks, safe deposit companies, savings and loan
 associations,  credit  unions,  PUBLIC  BANKS  ORGANIZED  UNDER  ARTICLE
 THREE-C OF THIS CHAPTER, and investment companies.
   § 4. The banking law is amended by adding a new article 3-C to read as
 follows:
                                ARTICLE 3-C
                               PUBLIC BANKS
 SECTION 156.   DEFINITIONS.
         156-A. SPONSORS AND CORPORATE STRUCTURE.
         156-B. GOVERNANCE.
         156-C. PUBLIC BANK CHARTER REQUIREMENTS.
         156-D. FINANCIAL AND OPERATIONS FRAMEWORK.
         156-E. PUBLIC BENEFIT CORPORATIONS.
         156-F. INSURANCE.
         156-G. DEPOSIT.
         156-H. PERMITTED ACTIVITIES OF THE PUBLIC BANK.
         156-I. INCONSISTENCY WITH OTHER LAWS.
         156-J. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.
   § 156. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
   1. "ADVISORY BOARD" MEANS A BOARD ESTABLISHED PURSUANT TO SECTION  ONE
 HUNDRED FIFTY-SIX-B OF THIS ARTICLE.
   2. "AFFILIATE" MEANS:
   (A) IN THE CASE OF A PERSON (OTHER THAN AN INDIVIDUAL), ANOTHER PERSON
 THAT  DIRECTLY,  OR  INDIRECTLY  THROUGH  ONE  OF  MORE  INTERMEDIARIES,
 CONTROLS, OR IS CONTROLLED BY, OR IS  UNDER  COMMON  CONTROL  WITH  SUCH
 PERSON.
   (B)  IN  THE  CASE  OF  AN INDIVIDUAL, (I) ANY MEMBER OF THE IMMEDIATE
 FAMILY OF SUCH INDIVIDUAL, INCLUDING PARENTS, SIBLINGS, SPOUSE AND CHIL-
 DREN (INCLUDING THOSE BY ADOPTION) AND ANY OTHER  PERSON  WHO  LIVES  IN
 SUCH  INDIVIDUAL'S HOUSEHOLD; THE PARENTS, SIBLINGS, SPOUSE, OR CHILDREN
 (INCLUDING THOSE BY ADOPTION) OF SUCH IMMEDIATE FAMILY  MEMBER,  AND  IN
 ANY  SUCH CASE ANY TRUST WHOSE PRIMARY BENEFICIARY IS SUCH INDIVIDUAL OR
 ONE OR MORE MEMBERS OF SUCH IMMEDIATE FAMILY  AND/OR  SUCH  INDIVIDUAL'S
 LINEAL  DESCENDANTS;  (II)  THE LEGAL REPRESENTATIVE OR GUARDIAN OF SUCH
 INDIVIDUAL OR OF ANY SUCH IMMEDIATE FAMILY  MEMBER  IN  THE  EVENT  SUCH
 INDIVIDUAL OR ANY SUCH IMMEDIATE FAMILY MEMBER BECOMES MENTALLY INCOMPE-
 TENT;  AND  (III)  ANY PERSON CONTROLLING, CONTROLLED BY OR UNDER COMMON
 CONTROL WITH SUCH INDIVIDUAL.
   (C) AS USED IN THIS DEFINITION,  THE  TERM  "CONTROL,"  INCLUDING  THE
 CORRELATIVE  TERMS  "CONTROLLING,"  "CONTROLLED  BY"  AND  "UNDER COMMON
 CONTROL WITH," MEANS POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO
 DIRECT OR CAUSE THE DIRECTION OF MANAGEMENT OR POLICIES (WHETHER THROUGH
 OWNERSHIP OF SECURITIES OR ANY PARTNERSHIP OR OTHER OWNERSHIP  INTEREST,
 BY CONTRACT OR OTHERWISE) OF A PERSON. SUCH CONTROL SHALL BE PRESUMED TO
 EXIST WHERE A PERSON OWNS A TEN PERCENT OR GREATER OWNERSHIP INTEREST IN
 ANOTHER PERSON.
   (D)  "PERSON"  SHALL  BE  CONSTRUED BROADLY AND SHALL INCLUDE, WITHOUT
 LIMITATION, AN INDIVIDUAL, A PARTNERSHIP, A LIMITED LIABILITY COMPANY, A
 CORPORATION, AN ASSOCIATION, A JOINT STOCK COMPANY,  A  TRUST,  A  JOINT

 S. 5565--D                          3

 VENTURE, AN UNINCORPORATED ORGANIZATION AND A GOVERNMENTAL ENTITY OR ANY
 DEPARTMENT, AGENCY OR POLITICAL SUBDIVISION THEREOF.
   3.  "BANK"  MEANS  ANY  CORPORATION,  OTHER  THAN A TRUST CORPORATION,
 ORGANIZED UNDER OR SUBJECT TO THE PROVISIONS OF THIS ARTICLE OR  ARTICLE
 THREE OF THIS CHAPTER.
   4. "BOARD" MEANS A BOARD OF DIRECTORS OR BOARD OF MANAGERS OF A PUBLIC
 BANK.
   5. "DEPOSIT" MEANS THE PLACING OF MONEY WITH A PUBLIC BANK TO BE WITH-
 DRAWN  UPON  THE  DEPOSITOR'S  DEMAND OR UNDER THE RULES AND REGULATIONS
 AGREED UPON BETWEEN THE BANK AND THE DEPOSITOR.
   6. "ECONOMICALLY DISTRESSED COMMUNITIES" MEANS THOSE COMMUNITIES WHERE
 AT LEAST THIRTY PERCENT OF RESIDENTS HAVE INCOMES THAT ARE LESS THAN THE
 NATIONAL POVERTY LEVEL OR WHERE THE UNEMPLOYMENT RATE  IS  GREATER  THAN
 THE  NATIONAL UNEMPLOYMENT RATE; OR ECONOMIC OPPORTUNITY ZONE DESIGNATED
 COMMUNITIES, EXCLUDING CONTIGUITY ECONOMIC OPPORTUNITIES ZONES.
   7. "INDEPENDENT" MEANS, WITH RESPECT TO A MEMBER OF  A  PUBLIC  BANK'S
 BOARD  OF DIRECTORS, BOARD OF MANAGERS, OR ADVISORY BOARD, AN INDIVIDUAL
 WHO:
   (A) AT THE TIME OF HIS OR HER ELECTION  TO  THE  BOARD  OF  DIRECTORS,
 BOARD  OF  MANAGERS, OR ADVISORY BOARD OF A PUBLIC BANK, IS NOT A HOLDER
 OF ANY PUBLIC OFFICE WITHIN THE SPONSOR; AND
   (B) WITHIN THE PAST FIVE YEARS HAS NOT BEEN A HOLDER OF PUBLIC  OFFICE
 WITHIN SUCH SPONSOR.
   8.  "LOCAL  ELECTED  OFFICIAL" MEANS ANY OFFICER ELECTED TO A POSITION
 WITHIN A COUNTY, CITY, TOWN, VILLAGE, SCHOOL DISTRICT OR DISTRICT CORPO-
 RATION, OR ANY AGENCY, DEPARTMENT, DIVISION, BOARD, COMMISSION OR BUREAU
 THEREOF; PROVIDED, THAT, SUCH  TERM  SHALL  NOT  INCLUDE  ANY  JUDGE  OR
 JUSTICE OF A COURT.
   9.  "PUBLIC  BANK"  MEANS A NOT-FOR-PROFIT CORPORATION, A STOCK CORPO-
 RATION OR LIMITED LIABILITY COMPANY THAT IS CHARTERED PURSUANT  TO  THIS
 ARTICLE AS A BANK.
   10.  "PUBLIC  BANK  APPLICATION  DOCUMENTS"  MEANS A BUSINESS PLAN AND
 APPLICATION TO BE SUBMITTED TO  THE  DEPARTMENT  OF  FINANCIAL  SERVICES
 PURSUANT  TO  SECTION  ONE  HUNDRED  FIFTY-SIX-C OF THIS ARTICLE FOR THE
 PURPOSE OF CHARTERING A PUBLIC BANK.
   11. "PUBLIC FUNDS" MEANS FUNDS OF THE SPONSOR.
   12. "STATE OR LOCAL AUTHORITY" MEANS A LOCAL GOVERNMENT OR  AGENCY,  A
 GROUP  OF  TWO  OR  MORE  LOCAL GOVERNMENTS OR AGENCIES ACTING TOGETHER,
 SPECIAL DISTRICT, A GROUP  OF  TWO  OR  MORE  SPECIAL  DISTRICTS  ACTING
 TOGETHER,  STATE AGENCY, OR A GROUP OF TWO OR MORE STATE AGENCIES ACTING
 TOGETHER.
   13. "SPONSOR" MEANS ONE OR MORE CITIES, TOWNS, VILLAGES  AND/OR  COUN-
 TIES WITHIN THE STATE OF NEW YORK.
   §  156-A.  SPONSORS  AND CORPORATE STRUCTURE.   A PUBLIC BANK MAY BE A
 NOT-FOR-PROFIT CORPORATION, A LIMITED LIABILITY COMPANY  OR  CORPORATION
 THAT  IS  FORMED BY A SPONSOR, SUBJECT TO THE FOLLOWING CORPORATE STRUC-
 TURE REQUIREMENTS:
   1. THE SPONSOR SHALL BE (A) THE SOLE MEMBER OF A NOT-FOR-PROFIT PUBLIC
 BANK, (B) THE MAJORITY AND CONTROLLING MEMBER  OF  A  LIMITED  LIABILITY
 COMPANY PUBLIC BANK, AND (C) THE MAJORITY AND CONTROLLING SHAREHOLDER OF
 A CORPORATION PUBLIC BANK.
   2.  A  PUBLIC  BANK ORGANIZED AS A LIMITED LIABILITY COMPANY OR CORPO-
 RATION MAY HAVE OTHER MEMBERS OR SHAREHOLDERS BUT SUCH OTHER MEMBERS  OR
 SHAREHOLDERS SHALL ONLY BE PASSIVE MEMBERS OR SHAREHOLDERS AND SHALL NOT
 HAVE  ANY  CONSENT OR VETO RIGHTS OVER ANY DECISIONS, ANY REMOVAL RIGHTS

 S. 5565--D                          4
 
 OF THE SPONSOR, ANY RIGHTS TO ELECT OR CHOOSE THE BOARD  OR  ANY  VOTING
 RIGHTS WHATSOEVER.
   3.  PASSIVE MEMBERS OR PASSIVE SHAREHOLDERS SHALL BE ALLOWED TO INVEST
 CAPITAL INTO A PUBLIC BANK SO LONG AS SUCH PASSIVE  MEMBERS  OR  PASSIVE
 SHAREHOLDERS  ARE  APPROVED BY THE SPONSOR AND THE SPONSOR MAINTAINS THE
 RIGHT TO DIRECT THE PUBLIC BANK TO PURCHASE THE INTERESTS OF ANY PASSIVE
 MEMBERS OR SHAREHOLDERS AT A MARKET PRICE DETERMINED BY  AN  INDEPENDENT
 THIRD PARTY SELECTED BY THE SPONSOR AT ANY TIME.
   4.  THE  SPONSOR  SHALL  OWE  NO  FIDUCIARY DUTY NOR ANY OTHER DUTY TO
 PASSIVE INVESTORS. NO PASSIVE INVESTOR MAY PURSUE LEGAL  ACTION  AGAINST
 THE  SPONSOR  FOR  ANY  REASON  OTHER  THAN  FAILURE TO DISTRIBUTE FUNDS
 REQUIRED TO BE DISTRIBUTED PURSUANT TO GOVERNING DOCUMENTS OF THE PUBLIC
 BANK.
   § 156-B. GOVERNANCE. 1. THE PUBLIC BANK SHALL BE GOVERNED BY A  BOARD.
 SUCH BOARD SHALL BE COMPOSED OF NINE DIRECTORS OR ELEVEN DIRECTORS. EACH
 DIRECTOR SHALL LIVE WITHIN THE JURISDICTIONAL BOUNDARIES OF THE SPONSOR.
   2.  THE SPONSOR SHALL DETERMINE THE PUBLIC BANK'S INITIAL BOARD IN THE
 FOLLOWING MANNER:
   (A) THE MAYOR, OR HEAD OF THE EXECUTIVE BRANCH OF  GOVERNMENT  OF  THE
 SPONSOR OR SPONSORS, SHALL SELECT THREE MEMBERS WITH AT LEAST ONE MEMBER
 WITH BANKING OR FINANCIAL EXPERIENCE;
   (B) THE CITY COUNCIL, OR LEGISLATIVE BRANCH OF THE SPONSOR OR SPONSORS
 SHALL SELECT TWO MEMBERS WITH AT LEAST ONE MEMBER WITH BANKING OR FINAN-
 CIAL EXPERIENCE;
   (C)  THE  TREASURER, CONTROLLER OR ELECTED OFFICIAL CHARGED WITH OVER-
 SEEING THE SPONSOR OR  SPONSORS'  FINANCES  AND  THE  ADMINISTRATION  OF
 PUBLIC  FUNDS  SHALL SELECT ONE MEMBER WITH BANKING OR FINANCIAL EXPERI-
 ENCE; AND
   (D) THE BOARD MEMBERS SELECTED PURSUANT TO PARAGRAPHS (A) THROUGH  (C)
 OF  THIS  SUBDIVISION  SHALL,  PURSUANT  TO  A TWO-THIRDS MAJORITY VOTE,
 SELECT AT  THEIR  DISCRETION  EITHER  THREE  OR  FIVE  ADDITIONAL  BOARD
 MEMBERS,  WITH THE SOLE PURPOSE OF MAXIMIZING BOARD DIVERSITY TO INCLUDE
 A VARIETY OF THE SPONSOR'S COMMUNITY CONSTITUENTS.  FOR ANY SPONSOR THAT
 IS ALSO A CITY WITH A POPULATION OF  ONE  MILLION  OR  MORE,  THE  BOARD
 MEMBERS SELECTED PURSUANT TO PARAGRAPHS (A) THROUGH (C) OF THIS SUBDIVI-
 SION MAY, PURSUANT TO A TWO-THIRDS MAJORITY VOTE, SELECT EITHER SEVEN OR
 NINE ADDITIONAL BOARD MEMBERS TO MAXIMIZE BOARD DIVERSITY.
   3.  AT LEAST TWO BOARD MEMBERS SELECTED PURSUANT TO EACH OF PARAGRAPHS
 (A) THROUGH (C) OF SUBDIVISION TWO OF THIS SECTION SHALL BE  INDIVIDUALS
 WITH  EXPERIENCE IN THE FINANCE INDUSTRY OR THE BUSINESS OF BANKING WITH
 AN EMPHASIS ON COMMUNITY LENDING.
   4. AT LEAST ONE BOARD MEMBER SELECTED PURSUANT TO EACH  OF  PARAGRAPHS
 (A)  THROUGH (C) OF SUBDIVISION TWO OF THIS SECTION SHALL BE AN INDIVID-
 UAL REPRESENTATIVE OF AT LEAST ONE OF THE COMMUNITY STAKEHOLDERS  PRIOR-
 ITIZED  BY  THE  PUBLIC  BANK'S  UNDERWRITING  AND FINANCIAL POLICIES AS
 REFLECTED IN SECTION ONE HUNDRED FIFTY-SIX-H OF THIS ARTICLE.
   5. WHEN A BOARD MEMBER RESIGNS OR LEAVES OFFICE FOR  ANY  REASON,  THE
 INDIVIDUAL  SELECTED  TO  REPLACE SUCH BOARD MEMBER SHALL BE SELECTED BY
 WHATEVER BRANCH OF GOVERNMENT OR THE BOARD  SELECTED  THEIR  PREDECESSOR
 UNDER PARAGRAPHS (A) THROUGH (D) OF SUBDIVISION TWO OF THIS SECTION.
   6.  THE SPONSOR AND BOARD WILL TAKE ALL STEPS NECESSARY TO ENSURE THAT
 THE COMPOSITION OF THE BOARD REFLECTS THE COMPOSITION OF THE  POPULATION
 IN TERMS OF PEOPLE OF COLOR AND WOMEN.
   7.  A MAJORITY OF THE BOARD SHALL BE COMPOSED OF INDEPENDENT DIRECTORS
 WHO ARE NOT GOVERNMENT EMPLOYEES. THE CHAIR OF  THE  BOARD  MUST  BE  AN
 INDEPENDENT DIRECTOR.

 S. 5565--D                          5
 
   8.  THE  BOARD  SHALL  SET  POLICY  FOR THE PUBLIC BANK; PROVIDED THAT
 NEITHER THE BOARD NOR ANY DIRECTOR SHALL BE INVOLVED IN DAY TO DAY DECI-
 SIONS REGARDING PARTICULAR INSTRUMENTS. MANAGEMENT  DECISIONS  SHALL  BE
 MADE  INDEPENDENTLY  BY  BANK  MANAGEMENT  WHO SHALL BE APPOINTED BY THE
 BOARD CONSISTENT WITH BANK POLICY.
   9. THE BOARD MAY ESTABLISH ONE OR MORE COMMITTEES TO MANAGE THE PUBLIC
 BANK.
   10.  THE  BOARD  SHALL ADHERE TO ALL REPORTING REQUIREMENTS UNDER THIS
 CHAPTER REGARDING THE PUBLIC BANK'S FINANCIAL CONDITION.
   11. A PUBLIC BANK SHALL FORM ONE OR MORE ADVISORY BOARDS IN  ORDER  TO
 PROVIDE  ADVICE  AND  CARRY  OUT  ANY OTHER DUTIES, AS DETERMINED BY THE
 PUBLIC BANK, INCLUDING THE FOLLOWING:
   (A) PROVIDE INPUT TO  THE  BOARD  REGARDING  WAYS  TO  ACCOMPLISH  ITS
 MISSION;
   (B)  ENSURE  THAT THE BOARD FOLLOWS STRICT ETHICAL STANDARDS AS DETER-
 MINED BY THE SPONSOR IN THE PUBLIC BANK'S GOVERNING  DOCUMENTS,  THROUGH
 THE APPROVAL OF BYLAWS TO GOVERN THE BOARD'S MANAGEMENT;
   (C) PROVIDE TECHNICAL ADVICE AS NEEDED; AND
   (D)  PROVIDE AN ANNUAL REPORT TO THE PUBLIC AND THE SPONSOR EVALUATING
 THE PUBLIC BANK'S PERFORMANCE IN RELATION TO ITS  MISSION,  ITS  ETHICAL
 STANDARDS AND ITS FINANCIAL SOUNDNESS.
   12.  THE SPONSOR WILL DETERMINE THE INITIAL ADVISORY BOARD MEMBERSHIP,
 THE TERM OF ITS MEMBERS, THE QUALIFICATIONS OF MEMBERS  AND  THE  METHOD
 FOR  REPLACING  ITS  MEMBERS,  PROVIDED THAT A MAJORITY OF EACH ADVISORY
 BOARD IS MADE UP OF INDEPENDENT MEMBERS WHO ARE NOT GOVERNMENTAL EMPLOY-
 EES. THE ADVISORY BOARD SHALL BE COMPOSED OF NO FEWER THAN FIVE  AND  NO
 MORE  THAN  ELEVEN  MEMBERS. ANY ADVISORY BOARD MEMBER SHALL LIVE WITHIN
 THE JURISDICTIONAL BOUNDARY OF THE PUBLIC BANK'S SPONSOR OR ITS  MEMBERS
 OR SHAREHOLDERS.
   13.  ANY  ACTION  REQUIRED OR PERMITTED BY THIS CHAPTER TO BE TAKEN BY
 THE BOARD OR AN ADVISORY BOARD MAY BE TAKEN AT A DULY CALLED MEETING  OF
 SUCH BOARD IN ACCORDANCE WITH ITS GOVERNING DOCUMENTS OR WITHOUT A MEET-
 ING  IF  THE  ACTION  TAKEN IS EVIDENCED BY ONE OR MORE WRITTEN CONSENTS
 DESCRIBING THE ACTION TAKEN AND SIGNED BY EACH MEMBER OF  THE  BOARD  OR
 ADVISORY BOARD.
   §  156-C.  PUBLIC BANK CHARTER REQUIREMENTS. 1. A PROPOSED PUBLIC BANK
 SHALL BE CHARTERED BY THE DEPARTMENT UPON SUBMISSION OF THE PUBLIC  BANK
 APPLICATION DOCUMENTS THAT DEMONSTRATE THE FOLLOWING:
   (A)  THE  PURPOSE  OF  THE PROPOSED PUBLIC BANK IS CONSISTENT WITH THE
 PURPOSES REQUIRED UNDER THIS ARTICLE;
   (B) MINIMUM INITIAL CAPITALIZATION IS NO LESS THAN TEN PERCENT OF  THE
 PUBLIC  BANK'S  PROJECTED  LENDING TOTAL FOR THE FIRST YEAR OF OPERATION
 AFTER RECEIPT OF ITS CHARTER;
   (C) ADEQUATE RESERVES AND LIQUIDITY EXIST TO COVER THE  PUBLIC  BANK'S
 OBLIGATIONS RELATING TO DEPOSIT WITHDRAWALS AND DEFAULTED LOANS;
   (D) THE QUALIFICATIONS OF THE PROPOSED DIRECTORS;
   (E)  THE  QUALIFICATIONS  OF  THE PROPOSED CHIEF EXECUTIVE OFFICER AND
 MANAGEMENT TEAM;
   (F) AN ORGANIZATIONAL CHART;
   (G) POLICIES AND  PROCEDURES  PROHIBITING  ANY  ELECTED  OFFICIAL,  OR
 AFFILIATE  OF  SUCH  OFFICIALS, FROM RECEIVING A LOAN OR OTHER FINANCIAL
 ASSISTANCE FROM THE PUBLIC BANK;
   (H) PROCEDURES FOR OBTAINING FIDELITY INSURANCE;
   (I) SUFFICIENT INTERNAL AUDITS AND CONTROLS;
   (J) A PRO FORMA FINANCIAL STATEMENT  PROJECTING  ASSETS,  LIABILITIES,
 INCOME AND EXPENSES FOR NO LESS THAN A THREE YEAR PERIOD;

 S. 5565--D                          6
 
   (K)  THE  IMPACT  OF THE PUBLIC BANK ON THE SPONSOR'S FINANCIAL CONDI-
 TION;
   (L)  A  PLAN  TO  COMPLY  WITH THE COMMUNITY REINVESTMENT ACT AND FAIR
 LENDING REQUIREMENTS, PURSUANT TO SECTION TWO  HUNDRED  NINETY-SIX-A  OF
 THE EXECUTIVE LAW;
   (M) A CERTIFICATE OF INCORPORATION; AND
   (N)  A  NARRATIVE  BUSINESS PLAN DESCRIBING THE BANKING SERVICES TO BE
 PROVIDED.
   2. THE PUBLIC BANK MAY BUT SHALL  NOT  BE  REQUIRED  TO  COLLATERALIZE
 DEPOSITS  FROM THE SPONSOR OR ANY OTHER GOVERNMENTAL ENTITY WITH COLLAT-
 ERAL DETERMINED BY THE PUBLIC BANK IN ITS GOVERNING DOCUMENTS.
   3. THE PUBLIC BANK APPLICATION DOCUMENTS ARE NOT REQUIRED  TO  PROVIDE
 THAT THE PUBLIC BANK WILL RECEIVE DEPOSITS IN ITS INITIAL THREE YEARS OF
 OPERATION,  AND  NOT  RECEIVING  DEPOSITS  IN THE INITIAL THREE YEARS OF
 OPERATION SHALL NOT BE A REASON FOR DISAPPROVAL BY THE SUPERINTENDENT.
   4. PUBLIC BANK APPLICATION DOCUMENTS ARE NOT  REQUIRED  TO  INCLUDE  A
 MARKET,  PUBLIC  CONVENIENCE AND ADVANTAGE, COMPETITIVE IMPACT OR A BANK
 PREMISES ANALYSIS OR ADDRESS ANY OTHER MATTERS OTHER THAN  THOSE  LISTED
 IN SUBDIVISION ONE OF THIS SECTION.
   5.  PUBLIC  BANK  CHARTER  APPLICATIONS  THAT DO NOT CONFLICT WITH ANY
 REQUIREMENTS EXPRESSLY PROVIDED IN SUBDIVISION ONE OF THIS SECTION SHALL
 BE LIBERALLY GRANTED BY THE SUPERINTENDENT,  AND  ANY  DECISION  BY  THE
 SUPERINTENDENT  REFUSING  TO  GRANT  PERMISSION  FOR  THE OPERATION OF A
 PUBLIC BANK MAY BE APPEALED BY THE SPONSOR TO THE GOVERNOR WITHIN THIRTY
 DAYS FROM THE DATE OF SUCH DECISION, AND THE  GOVERNOR  SHALL  HAVE  THE
 POWER  TO AFFIRM, REVERSE, OR MODIFY SUCH DECISION BY THE SUPERINTENDENT
 IN THE GOVERNOR'S SOLE DISCRETION.
   § 156-D. FINANCIAL AND OPERATIONS FRAMEWORK. 1. THE  PUBLIC  BANK  MAY
 RAISE CAPITAL THROUGH:
   (A)  THE  RECEIPT  AND  LEVERAGE OF PUBLIC DEPOSITS, INCLUDING BUT NOT
 LIMITED TO THE GENERAL FUND, RESERVE FUND, SPECIAL DISTRICT  OR  CAPITAL
 FUND,
   (B) SPONSOR EQUITY CONTRIBUTIONS,
   (C) PASSIVE MEMBER OR SHAREHOLDER EQUITY CONTRIBUTIONS,
   (D) SALE OF CORPORATE DEBT TO SPONSOR, AND
   (E) SALE OF CORPORATE DEBT TO THIRD PARTIES.
   2.  THE  PUBLIC BANK SHALL HAVE ALL THE RIGHTS AND POWERS CONFERRED BY
 ARTICLES THREE AND FIFTEEN OF THIS CHAPTER, WHICH MUST BE EXERCISED IN A
 MANNER CONSISTENT WITH ITS MISSION.
   3. ALL LENDING AND ACTIONS OF THE  PUBLIC  BANK  SHALL  ABIDE  BY  THE
 UNITED NATIONS DECLARATION ON THE RIGHTS OF INDIGENOUS PEOPLES.
   4. THE SPONSOR MAY PROHIBIT INVESTMENTS AND LOANS THAT MAY BENEFIT ANY
 TYPE  OF DESIGNATED BUSINESS INCLUDING THE FOSSIL FUEL INDUSTRY, WEAPONS
 OR GUN MANUFACTURERS, MILITARY SYSTEMS COMPANIES, PRIVATE PRISONS, IMMI-
 GRATION DETENTION FACILITIES, COMPANIES ENGAGED IN OFFSHORE  TAX  AVOID-
 ANCE  OR  EXPLOITATIVE BUSINESS OR LABOR PRACTICES OR THE TOBACCO INDUS-
 TRY, ALL AS DETERMINED BY THE SPONSOR IN  THE  PUBLIC  BANK'S  GOVERNING
 DOCUMENTS.
   5.  THE  PUBLIC BANK SHALL BE EXEMPT FROM STATE, COUNTY, AND MUNICIPAL
 TAXES AND LICENSES, OF ANY KIND, INCLUDING INCOME,  CAPITAL  GAIN,  REAL
 ESTATE AND MORTGAGE RECORDING TAXES.
   6.  THE PUBLIC BANK SHALL NOT BE SOLD TO OR MERGED WITH ANOTHER ENTITY
 UNLESS SUCH ENTITY HAS A PUBLIC BANK CHARTER.
   § 156-E. PUBLIC BENEFIT CORPORATIONS. 1. A PUBLIC BANK MAY, BUT IS NOT
 REQUIRED TO, INCORPORATE AS A BENEFIT CORPORATION UNDER  ARTICLE  SEVEN-
 TEEN OF THE BUSINESS CORPORATION LAW.

 S. 5565--D                          7
 
   2.  A PUBLIC BANK MAY, BUT IS NOT REQUIRED TO, IDENTIFY IN ITS CERTIF-
 ICATE OF INCORPORATION A SPECIFIC PUBLIC BENEFIT,  CONSISTENT  WITH  THE
 PROVISIONS OF ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW. SPECIF-
 IC  PUBLIC  BENEFITS WITHIN THE MEANING OF THIS SECTION INCLUDE, BUT ARE
 NOT  LIMITED  TO,  STRENGTHENING  LOCAL  ECONOMIES, SUPPORTING COMMUNITY
 ECONOMIC DEVELOPMENT, ADDRESSING INFRASTRUCTURE AND  HOUSING  NEEDS  FOR
 LOCALITIES,  AND  PROVIDING  BANKING SERVICES TO UNBANKED OR UNDERBANKED
 COMMUNITIES.
   § 156-F. INSURANCE. A PUBLIC BANK SHALL OBTAIN  AND  MAINTAIN  DEPOSIT
 INSURANCE  CONSISTENT  WITH  SECTION  THIRTY-TWO  OF THIS CHAPTER TO THE
 EXTENT THAT IT ACCEPTS DEPOSITS FROM ANY THIRD  PARTY  THAT  IS  NOT  IN
 EXCESS OF TWO HUNDRED FIFTY THOUSAND DOLLARS.
   §  156-G.  DEPOSITS.  1.  THE  BOARD  SHALL DEVELOP A PLAN, SUBJECT TO
 APPROVAL BY THE ADVISORY BOARD, TO ACCEPT AND MANAGE DEPOSITS.
   2. THE COMPTROLLER OR CHIEF FINANCIAL OFFICER OF THE SPONSOR SHALL  BE
 AUTHORIZED TO DEPOSIT PUBLIC FUNDS IN THE PUBLIC BANK, PROVIDED THAT THE
 PUBLIC  BANK'S  BUSINESS PLAN PERMITS THE COMPTROLLER OR CHIEF FINANCIAL
 OFFICER TO MEET THE SHORT OR INTERMEDIATE-TERM LIQUIDITY  NEEDS  OF  THE
 SPONSOR.
   3.  THE  PUBLIC BANK MAY ACCEPT DEPOSITS, BUT SHALL BE EXEMPT FROM THE
 REQUIREMENTS OF SECTION ONE HUNDRED FIVE OF THIS CHAPTER.
   4. THE PUBLIC BANK MAY ACCEPT DEPOSITS FROM ANY SOURCE AND FUNDS  FROM
 ANY SOURCE, INCLUDING FEDERAL FUNDS.
   §  156-H. PERMITTED ACTIVITIES OF THE PUBLIC BANK. 1.  THE PUBLIC BANK
 SHALL HAVE ALL THE RIGHTS AND POWERS CONFERRED  BY  ARTICLES  THREE  AND
 FIFTEEN OF THIS CHAPTER, WHICH SHALL BE EXERCISED IN A MANNER CONSISTENT
 WITH  ITS MISSION.   THE PUBLIC BANK MAY LIMIT AND DEFINE ITS RIGHTS AND
 POWERS IN THE CHARTER THAT IT SUBMITS PURSUANT TO  SECTION  ONE  HUNDRED
 FIFTY-SIX-C OF THIS ARTICLE, BUT IT IS THE INTENTION TO GRANT ANY PUBLIC
 BANK  CREATED  UNDER  THIS  LAW THE FULL RIGHTS AND POWERS THAT ANY BANK
 WOULD BE PERMITTED TO EXERCISE UNDER NEW YORK'S BANKING LAWS, SUBJECT TO
 THOSE LIMITATIONS THAT WILL BE APPROVED BY THE DEPARTMENT.
   2. WITHIN THE OVERALL  UNDERWRITING  AND  FINANCIAL  POLICIES  OF  THE
 PUBLIC  BANK,  THE  PUBLIC  BANK  SHALL  MAXIMIZE  AND  PRIORITIZE LOANS
 SUPPORTING WORKER COOPERATIVES, COMMUNITY LAND  TRUSTS,  LOW-INCOME  AND
 AFFORDABLE  HOUSING, RENEWABLE ENERGY, INFRASTRUCTURE DEVELOPMENT, SMALL
 BUSINESSES, SMALL FARMS, MINORITY- AND WOMEN-OWNED BUSINESS ENTERPRISES,
 STUDENTS IN NEED OF LOW-COST EDUCATION FINANCING OR REFINANCING  STUDENT
 LOAN  DEBTS,  AND  OTHER  INITIATIVES  THAT  FULFILL  THE  PUBLIC BANK'S
 MISSION, WITH A FOCUS ON SERVING UNDERSERVED  AND  UNDERBANKED  COMMUNI-
 TIES, AS WELL AS THOSE WITHIN ECONOMICALLY DISTRESSED COMMUNITIES.
   §  156-I. INCONSISTENCY WITH OTHER LAWS. 1. A PUBLIC BANK SHALL COMPLY
 WITH ALL REQUIREMENTS OF THIS CHAPTER, THE FINANCIAL SERVICES  LAW,  THE
 STATE FINANCE LAW, THE LOCAL FINANCE LAW, THE GENERAL MUNICIPAL LAW, THE
 NOT-FOR-PROFIT  CORPORATION  LAW,  AND  ALL OTHER RELEVANT PROVISIONS OF
 STATE OR LOCAL LAW, EXCEPT TO THE EXTENT THAT A REQUIREMENT  OF  ANY  OF
 THOSE  LAWS  IS  INCONSISTENT WITH A PROVISION OF THIS ARTICLE, IN WHICH
 CASE THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL.
   2. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW,  A  COUNTY  OR
 OTHER STATE OR LOCAL AUTHORITY MAY LEND ITS CREDIT TO ANY PUBLIC BANK.
   3.  NOTWITHSTANDING  ANY PROVISION OF STATE OR LOCAL LAW, ANY STATE OR
 LOCAL AUTHORITY MAY INVEST IN COMMERCIAL PAPER, DEBT SECURITIES OR OTHER
 OBLIGATIONS OF A PUBLIC BANK.
   4. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, A PUBLIC  BANK
 SHALL BE ELIGIBLE TO RECEIVE STATE AND LOCAL AUTHORITY MONEY.

 S. 5565--D                          8

   §  156-J. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.  FOR THE
 PURPOSES OF SECTION ONE HUNDRED THIRTY-TWO OF THIS CHAPTER, ANY SPONSOR,
 PERSON OR ENTITY, INCLUDING A  STATE  OR  LOCAL  AUTHORITY,  THAT  OWNS,
 CONTROLS,  OR HOLDS AN OWNERSHIP INTEREST IN A PUBLIC BANK IS NOT A BANK
 HOLDING COMPANY BY REASON OF THAT OWNERSHIP INTEREST.
   §  5.  Section  98 of the state finance law is amended by adding a new
 subdivision 7-a to read as follows:
   7-A. COMMERCIAL PAPER, DEBT SECURITIES, BONDS, NOTES, OR  OTHER  OBLI-
 GATIONS  OF  A PUBLIC BANK, AS DEFINED IN ARTICLE THREE-C OF THE BANKING
 LAW.
   § 6. Paragraph d of subdivision 1 of section 10 of the general munici-
 pal law, as amended by chapter 623 of the laws of 1998,  is  amended  to
 read as follows:
   d.  "Bank"  shall mean a bank OR PUBLIC BANK as defined by the banking
 law or a national banking association located and authorized to do busi-
 ness in New York.
   § 7. This act shall take effect immediately.