S T A T E O F N E W Y O R K
________________________________________________________________________
1453
2023-2024 Regular Sessions
I N S E N A T E
January 12, 2023
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Introduced by Sens. SANDERS, MANNION, MAY, MAYER, PARKER, RAMOS, SKOUFIS
-- read twice and ordered printed, and when printed to be committed to
the Committee on Banks
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-
IZED TO DO BUSINESS IN NEW YORK WHICH HAS ITS PRINCIPAL OFFICE IN A
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04168-01-3
S. 1453 2
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
SENIOR OFFICIAL IN THE CREDIT UNION WITH RESPONSIBILITY FOR PERFORMING
S. 1453 3
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,
concerning the impact of allowing credit unions, savings banks, savings
S. 1453 4
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
S. 1453 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.
