BILL NUMBER: S4140

SPONSOR: SANDERS
 
TITLE OF BILL:

An act to amend the banking law, in relation to federally chartered
banking organizations

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to expand the authority of the superinten-
dent of the New York state department of financial services to obtain
detailed information and to conduct meetings concerning the planned
closing of branch offices proposed not only by state-chartered banking
organizations, but also federally chartered banking organizations.

 
SUMMARY OF PROVISIONS:

Section one amends section 28-c of the banking law by authorizing the
superintendent of the New York state department of financial services to
obtain detailed information concerning the planned closing of branch
offices by state-chartered and federally chartered banking organiza-
              

tions, the availability of alternative financial services within the
general area served by such branch and the economic impact upon the
community resulting from such closing, and to provide the superintendent
with authority to conduct meetings with banking organizations and commu-
nity groups in areas where a branch closing is planned.

Section two sets forth an immediate effective date.

 
JUSTIFICATION:

Bank branches serve an essential role in creating and maintaining an
economically vibrant community. A bank branch provides a convenient and
safe place for local residents to deposit their money, accumulate
savings and obtain home and small business loans. In addition, a bank
branch serves to attract businesses to the local neighborhood since they
can deposit business earnings at the end of the day without having to
drive a long distance and easily access safe and trustworthy lending
services. Furthermore, a local branch plays a critical role in the lives
of senior citizens and individuals with limited transportation options.

For these reasons, a branch closure can have a severe impact upon the
local community. The negative impacts are even more exacerbated in low
and moderate income neighborhoods.

According to a study conducted by the National Community Reinvestment
Coalition, from 2007 through 2010, bank and credit union branches
increased by 1,000 in middle- and upper-income neighborhoods while
decreasing by 530 in low- and moderate-income neighborhoods across the
country. In addition, branches increased in predominantly white neigh-
borhoods by 598 while decreasing by 186 in minority neighborhoods where
more than 50 percent of the residents are minority.

The disparity in branches and the negative impact resulting from a
branch closure highlight the importance of ensuring that concerns and
input of the local community are taken into consideration in the deci-
sion making process.

Currently, federally-chartered banking organizations are required to
provide advanced notice to an appropriate federal agency and its custom-
ers. However, under the existing federal regulation, the community does
not have the meaningful input in the decision making process and the
federal notice requirement does not go far enough in addressing the
concerns of the community and protecting the interest of such branch
customers.

In comparison to the federal regulation, New York state banking law
imposes more stringent notice requirements upon state-chartered banking
organizations planning to close a branch. Specifically, state law
authorizes the superintendent of the department of financial services to
obtain more comprehensive information, which includes availability of
alternative financial services within the general area, economic impact
upon the community resulting from such closing, and a description of any
planned, limited or full service banking facility to be opened within
such area. In addition, it allows the superintendent to conduct meetings
with banking organizations and community groups in areas where a branch
closing is planned.

This legislation purports to ensure that bank branches are accessible to
all communities by requiring that not only state-chartered, but feder-
ally chartered bank organizations also comply with the relevant New York
state banking law concerning the planned closing of branch offices.

 
LEGISLATIVE HISTORY:

2021-22 REFERRED TO SENATE BANKS

2021-22 referred to assembly banks

2019-20 REFERRED TO SENATE BANKS

2019-20 referred to assembly banks

 
FISCAL IMPLICATION:

None.

 
EFFECTIVE DATE:
This legislation shall take effect immediately.