BILL NUMBER: S5157

SPONSOR: PARKER
 
TITLE OF BILL:

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

 
PURPOSE:

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

 
SUMMARY OF PROVISIONS:

Section 1: The public authorities law is amended by adding a new section
2891.

Section 2: This act shall take effect on the one hundred eightieth day
after it shall have become a law.

              

 
JUSTIFICATION:

In 1977, Congress passed the Community Reinvestment Act (CRA), a law
that sought to eliminate discriminatory behavior by banks. The CRA
requires banks to meet. the financial needs of their communities by
investing in low to moderate-income neighborhoods. One of the CRA's most
powerful tools to spur banks to return capital to the neighborhoods from
which they extracted it, is the CRA's focus upon neighborhood lending
target compliance, and enforcement against banks that fail to meet
federal lending guidelines. The overall goal is to encourage banks to
lend in distressed communities, and by creating such a pool of liquid
funds, to increase economic development, small business and consumer
lending, and homeownership.

A recent report by the Association for Neighborhood and Housing Develop-
ment (ANHD) concerning New York City's 17 largest banks reveal that
while deposits grew by more than $452 billion in 2007 and 2008, these
institutions reduced community lending 20.2% or $560 million dollars.
Furthermore, the report concludes that these banks also reduced their
multi-family loans in low-income areas by nearly twenty-five percent, or
$1.3 billion dollars. While this report may be no more than a window
into a problem whose parameters are different outside of New York City,
the dramatic declines in lending portrayed during a period of consumer
credit crisis are distressing and endanger the prosperity and recovery
of New York's communities.  In New York, billions of dollars are held on
deposit by public authorities, commissions and public benefit corpo-
rations, and the deposit or withholding of such funds can act as a power
incentive for CRA compliance, This bill would further enhance CRA
compliance by directing the public authorities continued or created in
New York not to deposit funds in those banks that have not received a
CRA rating of satisfactory or better.

 
PRIOR LEGISLATIVE HISTORY:

2021-22: S4425 - Referred to Corporations, Authorities and Commissions

2019-20: S.4262 - Referred to Corporations, Authorities and Commissions
2017-18: S.2265 - REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS

2015-16: S.2453 - Referred to Corporation, Authorities and Commissions

2013-14: S.2780/A.2058 - Referred to Corporations, Authorities and
Commissions

2011-12: S.2850/A.5947 - Referred to Corporations, Authorities and
Commissions/Referred to Ways and Means

2009-10: S.8507/A.11713 - Referred to Rules/Referred to Corporations

 
FISCAL IMPACT ON THE STATE:

None.

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