S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  3246--A
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 2, 2023
                                ___________
 
 Introduced  by M. of A. HUNTER, FAHY, DICKENS, LAVINE, SAYEGH, JACOBSON,
   WEPRIN, BURDICK, SLATER -- read once and referred to the Committee  on
   Banks  --  committee  discharged,  bill  amended, ordered reprinted as
   amended and recommitted to said committee
 
 AN ACT to amend the general  municipal  law  and  the  banking  law,  in
   relation  to  allowing  credit unions, savings banks, savings and loan
   associations and federal savings associations  to  accept  and  secure
   deposits  from  municipal  corporations;  to  direct the department of
   financial services to conduct a study and issue  a  report  concerning
   the  impact of allowing certain financial institutions to accept local
   government public deposits; and providing for the  repeal  of  certain
   provisions upon the expiration thereof
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph d of subdivision 1 of section 10 of  the  general
 municipal law, as amended by chapter 623 of the laws of 1998, is amended
 to read as follows:
   d.  "Bank"  shall  mean  a  bank  as  defined  by the banking law or a
 national banking association located and authorized to  do  business  in
 New  York;  A  SAVINGS BANK AS DEFINED BY THE BANKING LAW, A SAVINGS AND
 LOAN ASSOCIATION AS DEFINED BY THE BANKING  LAW  OR  A  FEDERAL  SAVINGS
 ASSOCIATION  LOCATED AND AUTHORIZED TO DO BUSINESS IN NEW YORK WHICH HAS
 ITS PRINCIPAL OFFICE IN A LOCATION DESCRIBED IN PARAGRAPH (A) OF  SUBDI-
 VISION  TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF THE BANKING LAW, OR A
 BRANCH OFFICE IN A LOCATION DESCRIBED IN PARAGRAPH  (B)  OF  SUBDIVISION
 TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF THE BANKING LAW.
   §  2.  Section  10 of the general municipal law is amended by adding a
 new subdivision 5 to read as follows:
   5. IN ADDITION TO THE  FINANCIAL  INSTITUTIONS  AUTHORIZED  TO  ACCEPT
 PUBLIC  DEPOSITS  IN  SUBDIVISION TWO OF THIS SECTION, CREDIT UNIONS, AS
 DEFINED BY THE BANKING LAW OR A FEDERAL CREDIT UNION LOCATED AND AUTHOR-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04168-03-3
              

 A. 3246--A                          2
 
 IZED TO DO BUSINESS IN NEW YORK WHICH HAS  ITS  PRINCIPAL  OFFICE  IN  A
 LOCATION  DESCRIBED  IN  PARAGRAPH  (A)  OF  SUBDIVISION THIRTY-EIGHT OF
 SECTION FOUR HUNDRED FIFTY-FOUR OF THE BANKING LAW, OR A  BRANCH  OFFICE
 IN  A LOCATION DESCRIBED IN PARAGRAPH (B) OF SUBDIVISION THIRTY-EIGHT OF
 SECTION FOUR HUNDRED FIFTY-FOUR OF THE BANKING LAW,  MAY  ACCEPT  PUBLIC
 DEPOSITS  BY  A  LOCAL  GOVERNMENT  SUBJECT TO THE LIMITATIONS SET FORTH
 HEREIN. FOR THE CALENDAR YEAR  BEGINNING  JANUARY  FIRST,  TWO  THOUSAND
 TWENTY-FOUR, THE GOVERNING BOARD OF A LOCAL GOVERNMENT MAY DESIGNATE ONE
 OR  MORE CREDIT UNIONS, FOR THE DEPOSIT OF PUBLIC FUNDS IN AN AMOUNT NOT
 TO EXCEED FIVE HUNDRED THOUSAND DOLLARS IN EACH INSTITUTION.    FOR  THE
 CALENDAR  YEAR  BEGINNING  JANUARY  FIRST, TWO THOUSAND TWENTY-FIVE, THE
 GOVERNING BOARD OF A LOCAL GOVERNMENT MAY DESIGNATE ONE OR  MORE  CREDIT
 UNIONS  FOR  THE  DEPOSIT OF PUBLIC FUNDS IN AN AMOUNT NOT TO EXCEED ONE
 MILLION DOLLARS IN EACH INSTITUTION. FOR  THE  CALENDAR  YEAR  BEGINNING
 JANUARY  FIRST,  TWO THOUSAND TWENTY-SIX, THE GOVERNING BOARD OF A LOCAL
 GOVERNMENT MAY DESIGNATE ONE OR MORE CREDIT UNIONS FOR  THE  DEPOSIT  OF
 PUBLIC  FUNDS  IN  AN  AMOUNT  NOT TO EXCEED TWO MILLION DOLLARS IN EACH
 INSTITUTION.  FOR THE CALENDAR YEAR BEGINNING JANUARY FIRST,  TWO  THOU-
 SAND  TWENTY-SEVEN, THE GOVERNING BOARD OF A LOCAL GOVERNMENT MAY DESIG-
 NATE ONE OR MORE CREDIT UNIONS FOR THE DEPOSIT OF  PUBLIC  FUNDS  IN  AN
 AMOUNT  NOT TO EXCEED THREE MILLION DOLLARS IN EACH INSTITUTION. FOR THE
 CALENDAR YEAR BEGINNING JANUARY FIRST, TWO  THOUSAND  TWENTY-EIGHT,  THE
 GOVERNING  BOARD  OF A LOCAL GOVERNMENT MAY DESIGNATE ONE OR MORE CREDIT
 UNIONS FOR THE DEPOSIT OF PUBLIC FUNDS IN AN AMOUNT NOT TO  EXCEED  FOUR
 MILLION  DOLLARS  IN  EACH  INSTITUTION. FOR THE CALENDAR YEAR BEGINNING
 JANUARY FIRST, TWO THOUSAND TWENTY-NINE, THE GOVERNING BOARD OF A  LOCAL
 GOVERNMENT  MAY  DESIGNATE  ONE OR MORE CREDIT UNIONS FOR THE DEPOSIT OF
 PUBLIC FUNDS IN AN AMOUNT NOT TO EXCEED FIVE  MILLION  DOLLARS  IN  EACH
 INSTITUTION.  FOR  THE  PURPOSES  OF THIS SECTION, A DEPOSIT LIMIT SHALL
 MEAN THE MAXIMUM AMOUNT OF ALL FUNDS OF A LOCAL GOVERNMENT IN AN  INSTI-
 TUTION BASED ON A DAILY ACCOUNT BALANCE EXCLUDING ANY ACCRUED INTEREST.
   §  3. Section 454 of the banking law is amended by adding a new subdi-
 vision 38 to read as follows:
   38. (A) TO ACCEPT DEPOSITS  FOR  CREDIT  TO  A  LOCAL  GOVERNMENT,  AS
 DEFINED  IN PARAGRAPH A OF SUBDIVISION ONE OF SECTION TEN OF THE GENERAL
 MUNICIPAL LAW, AT ITS PRINCIPAL OFFICE WHERE SUCH CREDIT UNION MAINTAINS
 ITS PRINCIPAL OFFICE WITHIN THE JURISDICTION OF SUCH LOCAL GOVERNMENT.
   (B) TO ACCEPT DEPOSITS FOR CREDIT TO A LOCAL GOVERNMENT, AS DEFINED IN
 PARAGRAPH A OF SUBDIVISION ONE OF SECTION TEN OF THE  GENERAL  MUNICIPAL
 LAW,  AT  ITS  BRANCH  OFFICE WHERE SUCH CREDIT UNION MAINTAINS A BRANCH
 OFFICE WITHIN THE JURISDICTION OF SUCH LOCAL GOVERNMENT.
   § 4. The banking law is amended by adding a new section 454-a to  read
 as follows:
   §  454-A.  DEPOSITS  OF  PUBLIC MONEY WITH CREDIT UNIONS; SECURITY.  A
 CREDIT UNION MAY ACCEPT DEPOSITS OF PUBLIC MONEY SUBJECT TO THE  LIMITA-
 TIONS  PROVIDED  IN  SUBDIVISION  THIRTY-EIGHT  OF  SECTION FOUR HUNDRED
 FIFTY-FOUR OF THIS ARTICLE. SUCH CREDIT UNION  SHALL  PLEDGE  ASSETS  OR
 FURNISH OTHER SECURITY SATISFACTORY IN FORM AND AMOUNT TO THE DEPOSITOR,
 FOR  THE  REPAYMENT  OF  MONIES HELD IN THE NAME OF SUCH DEPOSITOR, WHEN
 REQUIRED TO BE SECURED BY APPLICABLE LAW, DECREE OR REGULATION.
   § 5. The banking law is amended by adding a new section 454-b to  read
 as follows:
   §  454-B. COMMUNITY INVESTMENT BY CREDIT UNION; CONDITION OF ACCEPTING
 MUNICIPAL DEPOSITS.  1. IF THE AVERAGE DAILY BALANCE  OF  THE  MUNICIPAL
 FUNDS ON DEPOSIT AT THE CREDIT UNION FOR THE PRECEDING YEAR IS IN EXCESS
 OF  THREE  HUNDRED THOUSAND DOLLARS, THE CHIEF FINANCIAL OFFICER, OR THE
 A. 3246--A                          3

 SENIOR OFFICIAL IN THE CREDIT UNION WITH RESPONSIBILITY  FOR  PERFORMING
 THE FUNCTIONS OF A CHIEF FINANCIAL OFFICER OF A CREDIT UNION THAT CHOOS-
 ES  TO  ACCEPT MUNICIPAL DEPOSITS PURSUANT TO SECTION TEN OF THE GENERAL
 MUNICIPAL  LAW, SHALL, CONSISTENT WITH SAFETY AND SOUNDNESS, TRANSMIT TO
 THE DEPARTMENT BY DECEMBER THIRTY-FIRST EACH  YEAR,  A  WRITTEN  CERTIF-
 ICATION,  IN  A  FORM  SPECIFIED BY THE SUPERINTENDENT AND POSTED ON THE
 DEPARTMENT'S WEBSITE, THAT THE CREDIT UNION HAS INVESTED INTO THE COMMU-
 NITY, PURSUANT TO THIS  SECTION,  A  SUM  EQUAL  TO  THE  AVERAGE  DAILY
 BALANCE,  MULTIPLIED  BY  A  FACTOR  OF  .0035, PROVIDED, HOWEVER, IN NO
 EVENT, SHALL A CREDIT UNION BE REQUIRED TO CONTRIBUTE A SUM IN EXCESS OF
 ONE HUNDRED THOUSAND DOLLARS IN ANY ONE YEAR.
   2. THE COMMUNITY INVESTMENT  DESCRIBED  IN  SUBDIVISION  ONE  OF  THIS
 SECTION  SHALL  BE  USED  TO  SUPPORT  ANY OF THE FOLLOWING PURPOSES, AS
 DETERMINED BY THE CREDIT UNION, IN ANY COMMUNITY WHERE SUCH CREDIT UNION
 HAS AUTHORITY TO PROVIDE  SERVICES,  PROVIDED  THE  CREDIT  UNION  SHALL
 PRIORITIZE LOW-INCOME COMMUNITIES WHEN CHOOSING WHERE TO INVEST:
   (A) MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISES IN THE COMMUNITY; OR
   (B) AFFORDABLE HOUSING (INCLUDING MULTIFAMILY RENTAL HOUSING) FOR LOW-
 AND MODERATE-INCOME INDIVIDUALS IN THE COMMUNITY; OR
   (C)  COMMUNITY  SERVICES TARGETED TO LOW- AND MODERATE-INCOME INDIVID-
 UALS IN THE COMMUNITY; OR
   (D) ACTIVITIES THAT REVITALIZE OR STABILIZE  THE  COMMUNITY  INCLUDING
 LOW- OR MODERATE-INCOME GEOGRAPHIES, OR DESIGNATED DISASTER AREAS; OR
   (E) FINANCIAL LITERACY.
   3.  FOR PURPOSES OF THE COMMUNITY INVESTMENT PURSUANT TO THIS SECTION,
 FIELD OF MEMBERSHIP RESTRICTIONS SHALL NOT APPLY.
   § 6. Subdivision 2 of section 237 of the banking law,  as  amended  by
 chapter 360 of the laws of 1984, is amended to read as follows:
   2. [No savings bank shall accept any deposit for credit to any munici-
 pal  corporation.]  (A)  A  SAVINGS  BANK  WHICH MAINTAINS ITS PRINCIPAL
 OFFICE WITHIN THE JURISDICTION OF A  LOCAL  GOVERNMENT,  AS  DEFINED  IN
 PARAGRAPH  A  OF SUBDIVISION ONE OF SECTION TEN OF THE GENERAL MUNICIPAL
 LAW, MAY ACCEPT DEPOSITS AT SUCH PRINCIPAL OFFICE  FOR  CREDIT  TO  SUCH
 LOCAL GOVERNMENT.
   (B)  A  SAVINGS BANK WHICH MAINTAINS A BRANCH OFFICE WITHIN THE JURIS-
 DICTION OF A LOCAL GOVERNMENT, AS DEFINED IN PARAGRAPH A OF  SUBDIVISION
 ONE  OF SECTION TEN OF THE GENERAL MUNICIPAL LAW, MAY ACCEPT DEPOSITS AT
 SUCH BRANCH OFFICE FOR CREDIT TO SUCH LOCAL GOVERNMENT.
   § 7. Section 234 of the banking law is amended by adding a new  subdi-
 vision 27 to read as follows:
   27. PURSUANT TO SUBDIVISION TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF
 THIS ARTICLE, TO PLEDGE ASSETS OR FURNISH OTHER SECURITY SATISFACTORY IN
 FORM  AND  AMOUNT  TO THE DEPOSITOR, FOR THE REPAYMENT OF MONIES HELD IN
 THE NAME OF SUCH DEPOSITOR, WHEN REQUIRED TO BE  SECURED  BY  APPLICABLE
 LAW,  DECREE  OR  REGULATION  AND  TO  EXERCISE  THE POWERS CONTAINED IN
 SECTION NINETY-SIX-B OF THIS CHAPTER.
   § 8. Section 383 of the banking law is amended by adding a new  subdi-
 vision 18 to read as follows:
   18. PURSUANT TO SUBDIVISION TWO OF SECTION TWO HUNDRED THIRTY-SEVEN OF
 THIS CHAPTER, TO PLEDGE ASSETS OR FURNISH OTHER SECURITY SATISFACTORY IN
 FORM  AND  AMOUNT  TO THE DEPOSITOR, FOR THE REPAYMENT OF MONIES HELD IN
 THE NAME OF SUCH DEPOSITOR, WHEN REQUIRED TO BE  SECURED  BY  APPLICABLE
 LAW,  DECREE  OR  REGULATION  AND  TO  EXERCISE  THE POWERS CONTAINED IN
 SECTION NINETY-SIX-B OF THIS CHAPTER.
   § 9. 1. The department of financial services is hereby authorized  and
 directed  to  study  and  issue  a  public  report with recommendations,
 A. 3246--A                          4
 
 concerning the impact of allowing credit unions, savings banks,  savings
 and  loan  associations  or federal savings associations to accept local
 government public deposits. This report shall be prepared  in  consulta-
 tion  with  stakeholders,  including  local  governments,  banks, credit
 unions, savings banks, savings and loan associations and federal savings
 associations.
   2. On or before January  1,  2029,  the  superintendent  of  financial
 services  shall  submit  to the governor, the temporary president of the
 senate, the speaker of the assembly, the chair of  the  senate  standing
 committee  on banks, and the chair of the assembly standing committee on
 banks, a written report detailing the findings  and  recommendations  on
 the  department's  study performed in accordance with subdivision one of
 this section. The superintendent shall use reasonable efforts to identi-
 fy any impacts by  expanding  the  financial  institutions  eligible  to
 accept municipal deposits and shall include the following information in
 the report:
   (a)  An  analysis  of deposits held in banks including the size of the
 bank's assets, location of banks, type of bank charter, changes  in  the
 amount  of commercial bank held deposits from the effective date of this
 act and overall impact on banking industry, in particular small communi-
 ty banks.
   (b) The growth of municipal deposits held in  credit  unions,  savings
 banks,  savings  and  loan  associations or federal savings associations
 after the effective date of this act.
   § 10. Section 86 of the banking law, as amended by chapter 274 of  the
 laws of 2007, is amended to read as follows:
   §  86.  Eligibility.  1.  FOR  THE  PURPOSES OF THIS ARTICLE, THE TERM
 "COMMUNITY BANK INSTITUTION" SHALL MEAN ANY STATE OR FEDERALLY CHARTERED
 BANKING INSTITUTION AND SHALL INCLUDE ANY BANK, TRUST  COMPANY,  SAVINGS
 BANK  OR SAVINGS AND LOAN ASSOCIATION WITH LESS THAN TEN BILLION DOLLARS
 IN ASSETS THAT IS HEADQUARTERED IN  THIS  STATE  AND  WHOSE  PREDOMINANT
 RETAIL  AND COMMERCIAL BANKING OPERATIONS SERVE RESIDENTS AND BUSINESSES
 OF THIS STATE, AS DETERMINED BY THE SUPERINTENDENT IN HIS  OR  HER  SOLE
 DISCRETION AND PURSUANT TO SUCH RULES AND REGULATIONS AS THE SUPERINTEN-
 DENT DEEMS NECESSARY TO IMPLEMENT AND ADMINISTER THESE PROVISIONS.
   2.  To  be eligible to receive deposits, or to renew existing deposits
 under this program[, a bank, trust company, savings bank or savings  and
 loan  association:  (a)  must  be chartered under the provisions of this
 chapter and (b)] A COMMUNITY BANK INSTITUTION:
   (A) must have a current CRA rating  of  satisfactory  or  better.  The
 superintendent  shall,  if  requested  by  the  state comptroller or the
 commissioner of taxation and finance, confirm whether a particular bank-
 ing institution meets the criteria specified in this section; AND
   (B) MEET ANY ADDITIONAL CRITERIA ESTABLISHED BY  THE  COMPTROLLER  AND
 THE  COMMISSIONER  OF  TAXATION AND FINANCE TO DETERMINE ELIGIBILITY FOR
 PARTICIPATION IN THE PROGRAM. SUCH CRITERIA MAY INCLUDE AN INSTITUTION'S
 LOAN TO DEPOSIT RATIO, ITS RECORD OF SMALL  BUSINESS  LENDING,  AND  THE
 IMPACT SUCH DEPOSITS WOULD HAVE ON AN AREA'S ECONOMIC ACTIVITY.
   [2.  A  federal  bank, trust company, savings bank or savings and loan
 association may also be eligible to receive deposits, or to renew exist-
 ing deposits, under this program if: (a) its principal office is located
 in this state; (b) it has  a  current  CRA  rating  of  satisfactory  or
 better;  and  (c)  it  meets  any additional criteria established by the
 comptroller and the commissioner of taxation and  finance  to  determine
 eligibility  for participation in the program. Such criteria may include
 an institution's loan to deposit ratio, its  record  of  small  business
 A. 3246--A                          5

 lending,  and  the impact such deposits would have on an area's economic
 activity.]
   §  11. Section 87 of the banking law, as amended by chapter 274 of the
 laws of 2007, subdivision 2 as amended by chapter 495  of  the  laws  of
 2013, is amended to read as follows:
   §  87.  Deposits.  1.  Notwithstanding  any  provisions  of law to the
 contrary, the state comptroller and the  commissioner  of  taxation  and
 finance  shall,  for  the purposes of administering moneys in accordance
 with the provisions of sections ninety-eight-a and one hundred  five  of
 the state finance law, give consideration to depositing funds into those
 community  banking  institutions  which  are  deemed eligible to receive
 deposits pursuant to section eighty-six of this article.
   2. The maximum amount of funds which the  state  comptroller  and  the
 commissioner  of  taxation  and  finance  may deposit under this program
 shall not exceed [two] THREE hundred [fifty] million dollars each.  [The
 maximum  amount  of  funds on deposit at a community banking institution
 shall not exceed twenty million dollars.]
   3. Notwithstanding any provision of law to the contrary, any  deposits
 made pursuant to this article shall be made at rates, and for such peri-
 ods of time, as may be agreed to by the state comptroller or the commis-
 sioner of taxation and finance and the eligible community banking insti-
 tution.
   4.  Any  deposits  made  pursuant to this article may be secured by an
 irrevocable letter of credit issued by a federal home loan bank.
   5. THE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE  SHALL
 ANNUALLY  SUBMIT A JOINT REPORT TO THE GOVERNOR, THE TEMPORARY PRESIDENT
 OF THE SENATE, THE SPEAKER OF THE ASSEMBLY,  THE  CHAIR  OF  THE  SENATE
 FINANCE  COMMITTEE,  THE CHAIR OF THE ASSEMBLY WAYS AND MEANS COMMITTEE,
 THE CHAIR OF THE SENATE STANDING COMMITTEE ON BANKS, AND  THE  CHAIR  OF
 THE ASSEMBLY STANDING COMMITTEE ON BANKS ON THE EFFICACY OF THE COMMUNI-
 TY  BANK  DEPOSIT PROGRAM, INCLUDING INFORMATION ON THE NUMBER OF QUALI-
 FIED COMMUNITY BANKING INSTITUTIONS, THE  NUMBER  OF  COMMUNITY  BANKING
 INSTITUTIONS  WHICH HAVE RECEIVED DEPOSITS, THE SIZE OF EACH PARTICIPAT-
 ING COMMUNITY BANK, THE NUMBER AND  AMOUNT  OF  SUCH  DEPOSITS  AND  THE
 PERCENTAGE  OF  TOTAL  STATE  FUNDS DEPOSITED IN SUCH INSTITUTIONS UNDER
 THIS PROGRAM.
   § 12. No municipal deposits held in credit unions by local governments
 on December 31, 2029 shall be required to be withdrawn upon the  expira-
 tion of this act.
   §  13.  This act shall take effect on the ninetieth day after it shall
 have become a law; provided that sections two,  three,  four,  five  and
 nine of this act shall expire and be deemed repealed December 31, 2029.