NY State Senate Bill 2023-S6827

Current Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to insurance
Jun 10, 2023	committed to rules vote reconsidered - restored to third reading substitution reconsidered
Jun 09, 2023	substituted by a4925
May 24, 2023	advanced to third reading
May 23, 2023	2nd report cal.
May 22, 2023	1st report cal.1189
May 11, 2023	referred to insurance

Votes

- May 22, 2023 - Insurance Committee Vote
  S6827
  
  10
  
  Aye
  
  0
  
  Nay
  
  1
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Insurance Committee Vote: May 22, 2023
      
      aye (10)
      
      Addabbo Jr.
      
      Borrello
      
      Breslin
      
      Cooney
      
      Harckham
      
      Helming
      
      Kennedy
      
      Martinez
      
      O'Mara
      
      Scarcella-Spanton
      
      aye wr (1)
      
      Sanders Jr.

2023-S6827 (ACTIVE) - Details

See Assembly Version of this Bill:: A4925
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§7425, 7419 & 7409, Ins L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S7329, A8040
2021-2022: S4282, A3573

2023-S6827 (ACTIVE) - Summary

Relates to certain voidable transfers affecting a federal home loan bank including injunctions and the conduct of delinquency proceedings against insurers domiciled in this state.

2023-S6827 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S6827

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to certain voidable
transfers affecting a federal home loan bank

 
PURPOSE:

Member banks of the Federal Home Loan Bank ("FHLB") currently use 10 of
their earnings to support low-income housing projects. In a member bank
insolvency, the FHLB may collect its collateral without interference
from a Receiver. However, New York Insurance Law inhibits member insur-
ers from borrowing from the FHLB because the FHLB is not given the same
protection from their Liquidator in case of insolvency forcing the FHLB
to overcollateralize any borrowing.  This bill would put FHLB insurer
members on par with bank members by protecting the FHLB's collateral and
encourage new insurance company membership and increased funding for
low-income projects. The only event that would void the protection would
be in a case where a transfer of assets was made with the intent to
defraud a member's receiver.

 
SUMMARY OF PROVISIONS:

This bill would add a new subdivision e (1) - (4) to Section 7425 of the
Insurance law. A receiver should not void the transfer of money or prop-
erty in connection with an FHLB security agreement before the formal
commencement of a formal proceeding unless transfer was made with intent
to defraud the member or a member's receiver. This bill prohibits a
receiver from voiding a redemption or repurpose of any stock or equity
securities which was made by the FHLB within four months of a formal
commencement of the delinquency proceedings or which received prior
approval.

 
JUSTIFICATION:

Currently under the New York State law when a member bank becomes insol-
vent, to the extent such member-insurer has taken an advance (an FHLB
loan) with FHLB and given collateral subject to any security agreement
held by the FHLB, the receiver, (Department of Financial Services) will
not interfere with the enforcement by the FHLB to exercise its rights
under its security agreement. This protection does not extend to insur-
ance companies who are members of the FHLB district covering this
region. Therefore, insurance companies are unable to seek funds from the
FHLB to support the creation and preservation of housing for low-income
families. This legislation would protect the FHLB where an insurance
company member is placed in 'receivership under the Article. Eighteen
other states have made similar amendments to their insurance insolvency
laws and others are considering such amendments, in order to encourage
investment in low income family housing.

 
LEGISLATIVE HISTORY:

S4282 - 2022

S7329 - 2020

 
FISCAL IMPLICATIONS:
None.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2023-S6827 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6827
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               May 11, 2023
                                ___________
 
 Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance  law,  in  relation  to  certain  voidable
   transfers affecting a federal home loan bank
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 7425 of the insurance law is amended  by  adding  a
 new subsection (e) to read as follows:
   (E)  (1)  NOTWITHSTANDING  SUBSECTION (A) OF THIS SECTION OR ANY OTHER
 PROVISION OF THIS ARTICLE TO THE CONTRARY, (I) A RECEIVER SHALL NOT VOID
 A TRANSFER OF MONEY OR OTHER PROPERTY ARISING  UNDER  OR  IN  CONNECTION
 WITH A FEDERAL HOME LOAN BANK SECURITY AGREEMENT THAT IS MADE BEFORE THE
 COMMENCEMENT  OF  A FORMAL PROCEEDING UNDER THIS ARTICLE IN THE ORDINARY
 COURSE OF BUSINESS AND IN COMPLIANCE WITH THE SECURITY AGREEMENT  UNLESS
 SUCH  TRANSFER  WAS  MADE WITH ACTUAL INTENT TO HINDER, DELAY OR DEFRAUD
 THE INSURER-MEMBER, A  RECEIVER  APPOINTED  FOR  THE  INSURER-MEMBER  OR
 EXISTING  OR  FUTURE  CREDITORS;  AND  (II)  A RECEIVER SHALL NOT VOID A
 REDEMPTION OR REPURCHASE OF ANY STOCK OR  EQUITY  SECURITIES  WHICH  WAS
 MADE  BY  THE  FEDERAL  HOME  LOAN  BANK  WITHIN FOUR MONTHS OF A FORMAL
 COMMENCEMENT OF THE DELINQUENCY  PROCEEDINGS  OR  WHICH  RECEIVED  PRIOR
 APPROVAL OF THE RECEIVER.
   (2)  FOLLOWING THE APPOINTMENT OF A RECEIVER FOR AN INSURER-MEMBER AND
 UPON REQUEST OF THE RECEIVER, THE FEDERAL HOME LOAN BANK  SHALL,  WITHIN
 TEN DAYS OF SUCH REQUEST, PROVIDE A PROCESS AND ESTABLISH TIMING FOR ALL
 OF THE FOLLOWING:
   (I)  THE  RELEASE  OF  COLLATERAL  THAT  EXCEEDS THE LENDING VALUE, AS
 DETERMINED IN ACCORDANCE WITH THE FEDERAL HOME LOAN BANK SECURITY AGREE-
 MENT, REQUIRED TO SUPPORT SECURED OBLIGATIONS REMAINING AFTER ANY REPAY-
 MENT OF ADVANCES;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06810-01-3
 S. 6827                             2

   (II) THE RELEASE OF ANY COLLATERAL REMAINING IN THE FEDERAL HOME  LOAN
 BANK'S POSSESSION FOLLOWING REPAYMENT IN FULL OF ALL OUTSTANDING SECURED
 OBLIGATIONS;
   (III)  THE  PAYMENT  OF  FEES  AND THE OPERATION OF DEPOSITS AND OTHER
 ACCOUNTS WITH THE FEDERAL HOME LOAN BANK; AND
   (IV) THE POSSIBLE REDEMPTION OR REPURCHASE OF FEDERAL HOME  LOAN  BANK
 STOCK OR EXCESS STOCK OF ANY CLASS THAT AN INSURER-MEMBER IS REQUIRED TO
 OWN.
   (3) UPON THE REQUEST OF THE RECEIVER FOR AN INSURER-MEMBER, THE FEDER-
 AL  HOME LOAN BANK SHALL PROVIDE ANY AVAILABLE OPTIONS THAT ARE ACCEPTA-
 BLE TO THE FEDERAL HOME LOAN BANK FOR SUCH INSURER-MEMBER  TO  RENEW  OR
 RESTRUCTURE  AN  ADVANCE  TO  DEFER  ASSOCIATED  PREPAYMENT FEES, TO THE
 EXTENT THAT MARKET CONDITIONS, THE TERMS OF THE ADVANCE  OUTSTANDING  TO
 THE  INSURER-MEMBER,  THE  APPLICABLE  POLICIES OF THE FEDERAL HOME LOAN
 BANK AND COMPLIANCE WITH THE FEDERAL HOME LOAN BANK ACT AND  CORRESPOND-
 ING REGULATIONS PERMIT.
   (4)  NOTHING  IN  THIS  SUBSECTION  SHALL AFFECT THE FEDERAL HOME LOAN
 BANK'S RIGHTS PURSUANT TO 12 CFR 1266.4, WHICH RELATES TO LIMITATIONS ON
 ACCESS TO ADVANCES.
   § 2. Section 7419 of the insurance law is  amended  by  adding  a  new
 subsection (c) to read as follows:
   (C)  NOTWITHSTANDING  SUBSECTIONS  (A) AND (B) OF THIS SECTION AND ANY
 OTHER PROVISION OF THIS ARTICLE, A FEDERAL HOME LOAN BANK SHALL  NOT  BE
 STAYED,  ENJOINED,  OR PROHIBITED FROM EXERCISING ANY RIGHT OR ENFORCING
 ANY OBLIGATION UNDER A FEDERAL HOME LOAN BANK SECURITY AGREEMENT  RELAT-
 ING TO COLLATERAL PLEDGED BY AN INSURER-MEMBER TO SUCH FEDERAL HOME LOAN
 BANK.
   §  3.  Section  7409  of  the insurance law is amended by adding a new
 subsection (d) to read as follows:
   (D) NOTWITHSTANDING SUBSECTIONS (A), (B) AND (C) OF THIS  SECTION,  OR
 ANY  OTHER  PROVISION  OF  THIS ARTICLE, THE RECEIVER SHALL NOT DISAVOW,
 REJECT, OR REPUDIATE A FEDERAL HOME LOAN BANK SECURITY AGREEMENT OR  ANY
 PLEDGE  AGREEMENT,  SECURITY  AGREEMENT, COLLATERAL AGREEMENT, GUARANTEE
 AGREEMENT, OR OTHER SIMILAR ARRANGEMENT OR CREDIT  ENHANCEMENT  RELATING
 TO A SECURITY AGREEMENT TO WHICH A FEDERAL HOME LOAN BANK IS A PARTY.
   § 4. This act shall take effect immediately.

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Senate Bill S6827

Sponsored By

Current Bill Status - In Senate Committee Insurance Committee

May 22, 2023 - Insurance Committee Vote

Insurance Committee Vote: May 22, 2023

2023-S6827 (ACTIVE) - Details

2023-S6827 (ACTIVE) - Summary

2023-S6827 (ACTIVE) - Sponsor Memo

2023-S6827 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S6827

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Sponsored By

Neil D. Breslin

Current Bill Status - In Senate Committee Insurance Committee

2023-S6827 (ACTIVE) - Details

2023-S6827 (ACTIVE) - Summary

2023-S6827 (ACTIVE) - Sponsor Memo

2023-S6827 (ACTIVE) - Bill Text download pdf

Comments