NY State Senate Bill 2023-S6982

Senate Bill S6982

2023-2024 Legislative Session

Relates to banking institutions charted in other states to be subjected to the approval of the superintendent of financial services

download bill text pdf

Current Bill Status - In Senate Committee Banks 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 banks
Jun 10, 2023	committed to rules
May 30, 2023	advanced to third reading
May 24, 2023	2nd report cal.
May 23, 2023	1st report cal.1255
May 16, 2023	referred to banks

Votes

- May 23, 2023 - Banks Committee Vote
  S6982
  
  3
  
  Aye
  
  0
  
  Nay
  
  4
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Banks Committee Vote: May 23, 2023
      
      aye (3)
      
      Kennedy
      
      Parker
      
      Sanders Jr.
      
      aye wr (4)
      
      Borrello
      
      Brisport
      
      Cleare
      
      Tedisco

2023-S6982 (ACTIVE) - Details

See Assembly Version of this Bill:: A7353
Current Committee:: Senate Banks
Law Section:: Banking Law
Laws Affected:: Amd §12-a, Bank L

2023-S6982 (ACTIVE) - Summary

Authorizes New York-chartered banking institutions to exercise any permitted powers of its counterpart federally or out-of-state chartered banking institutions.

2023-S6982 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S6982

SPONSOR: SANDERS
 
TITLE OF BILL:

An act to amend the banking law, in relation to authorizing New York
chartered banking institutions to exercise powers authorized to banking
institutions chartered in other states, subject to the approval of the
superintendent of financial services

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would amend Section 12-a of the Banking Law ("BL") to expand
the power of the Department to authorize New York state-chartered banks
to exercise the same powers authorized for comparable institutions char-
tered by other states.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill would enact various textual amendments to BL S
12-a to permit New York State chartered banking organizations to exer-
cise the same powers authorized to comparable institutions chartered by

other states. The bill changes the title of BL § 12-a to add "out-of-
state chartered" banking institutions. Subsection 1 of BL § 12-a is
amended to add references to "out-of-state" chartered banking insti-
tutions. The existing references to various types of federally chartered
financial institutions is amended to include references to their coun-
terpart state institutions, including state-chartered savings banks,
savings and loan associations, credit unions and foreign branches and
agencies chartered by other states. A new definition of a state-char-
tered bank is also added.

Subsection 2 of BL § 12-a is amended to provide that New York chartered
banking organizations can exercise, subject to approval by the Super-
intendent of Financial Services, powers authorized to federal or out-of-
state chartered banking institutions. Subsection 3 is amended to include
references to out-of-state chartered banking institutions and to remove
the existing requirement in BL § 12-a that an applicant provide written
consent to extend the Department's time to review an application to
exercise federally permitted powers.  Subsections 4, 5 and 6 are all
amended to add references to out-of-state chartered banking insti-
tutions.

Section 2 provides that the bill would take effect immediately.

 
EXISTING LAW:

BL § 12-a currently provides that New York chartered banking organiza-
tions can exercise the powers authorized to their counterpart federal
banking institutions provided that the Department of Financial Services
concludes that such powers are consistent with the policy of New York
State as stated in BL § 10 and thereby protects the interest of the
public and is necessary to maintain parity between New York banking
organizations and their federal counterparts.

 
JUSTIFICATION:

Banking organizations may choose to operate under either a state or
federal charter. Twenty-five years ago, to maintain the New York's bank-
ing charter as a competitive, attractive and viable alternative to a
federal charter, BL Section 12-a, the "wild card" law, was enacted to
allow New York chartered banks to exercise any "federally permitted
power" that a comparable federal banking institution may exercise.

In an increasingly interconnected financial system in which banks can
offer remote, digital services, banking institutions are being encour-
aged to relocate to other states. To encourage banking institutions to
relocate, states are looking to update wild card laws to enable banking
institutions to exercise any power permitted to a bank chartered in
another state. This proposal would authorize New York State chartered
banking institutions to apply to the Department for permission to exer-
cise any power a comparable insured banking institution chartered in
another state is authorized to exercise, provided that the existing
standards set forth in Banking Law Section 12-a are met.

An updated parity law would provides a flexible and timely method of
expanding and/or amending the permissible powers of state-chartered
banks in response to newly adopted state initiatives and would help
maintain the attractiveness of the New York charter. At the same time,
the proposal would maintain the established consumer protection mech-
anisms in Banking Law Section 12-a, requiring that banking institutions
demonstrate the powers authorized to other state banks could be offered
consistent with provision of safe and sound financial services practices
in New York.

 
PRIOR LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act would take effect immediately.

2023-S6982 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6982
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2023
                                ___________
 
 Introduced  by  Sen. SANDERS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 AN ACT to amend the banking law, in relation  to  authorizing  New  York
   chartered  banking institutions to exercise powers authorized to bank-
   ing institutions chartered in other states, subject to the approval of
   the superintendent of financial services
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.   Section 12-a of the banking law, as added by chapter 322
 of the laws of 2007, subdivision 3 as amended by chapter 448 of the laws
 of 2011 and subdivisions 4, 5, 7, 8 and 9 as amended by  section  88  of
 part A of chapter 62 of the laws of 2011, is amended to read as follows:
   §  12-a. Power of state chartered banking institutions to exercise the
 rights of counterpart federally OR OUT-OF-STATE chartered banking insti-
 tutions.
   1.  Definitions. (a) As used in this section, "state chartered banking
 institution" shall mean any bank, trust company, private banker, savings
 bank, savings and loan  association,  foreign  banking  corporation,  or
 credit union THAT IS CHARTERED OR LICENSED UNDER THIS CHAPTER.
   (b)  As  used in this section and as is applicable, "federally OR OUT-
 OF-STATE chartered banking institution" shall mean COLLECTIVELY: (i) any
 national banking association organized pursuant to the National Bank Act
 of 1864, as amended, (12 USC 21 et seq.);  (ii)  any  [federal]  savings
 association  as  such  term  is defined by the Federal Deposit Insurance
 Act, as amended, (12 USC 1813(b)([2] 1)), WHETHER FEDERALLY CHARTERED OR
 CHARTERED BY A STATE OTHER  THAN  NEW  YORK  ("FEDERAL  OR  OUT-OF-STATE
 SAVINGS BANK OR SAVINGS AND LOAN ASSOCIATION"); (iii) a [federal] branch
 [and]  OR  agency of a foreign [bank] BANKING CORPORATION, as such terms
 are defined by the International Banking Act of 1978, as amended, ([122]
 12 USC 3101), WHETHER FEDERALLY LICENSED OR LICENSED BY  A  STATE  OTHER
 THAN  NEW  YORK  ("FEDERAL OR OUT-OF-STATE BRANCH OR AGENCY OF A FOREIGN
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07925-02-3

 S. 6982                             2
 
 BANKING ORGANIZATION"); [or] (iv) a [federal] credit union, as such term
 is defined by the Federal Credit Union Act, as amended, (12 USC  1752(1)
 AND (6)), WHETHER FEDERALLY CHARTERED OR CHARTERED BY A STATE OTHER THAN
 NEW YORK ("FEDERAL OR OUT-OF-STATE CREDIT UNION"); OR (V) ANY STATE BANK
 AS  THAT  TERM  IS  DEFINED  BY  THE  FEDERAL  DEPOSIT INSURANCE ACT, AS
 AMENDED, (12 USC 1813(A)(2)) CHARTERED IN A STATE OTHER  THAN  NEW  YORK
 ("OUT-OF-STATE BANK").
   (c)  As  used  in  this section, "charter" shall mean the organization
 certificate or comparable document of a [state] banking institution,  or
 the  license  for  a  state branch or agency of a foreign banking corpo-
 ration, or a similar organizational document for [a federal] ANY  FEDER-
 ALLY  OR OUT-OF-STATE CHARTERED banking institution [or a federal branch
 or agency], and "chartered" shall mean the formal act of  the  state  or
 appropriate  federal  regulatory  agency in approving and conveying such
 charter of a banking institution.
   (d) As used in this  section,  "federally  OR  OUT-OF-STATE  CHARTERED
 BANKING INSTITUTION permitted power" shall mean any right, power, privi-
 lege  or  benefit,  any activity, or any loan, investment or transaction
 which a federally OR OUT-OF-STATE chartered banking institution directly
 or through a subsidiary or subsidiaries, may lawfully exercise  or  into
 which it may lawfully engage or enter.
   (e) As used in this section "foreign banking corporation" shall mean a
 banking  corporation  organized  under the laws of a foreign country and
 acting through a branch or agency licensed pursuant to  section  twenty-
 six of this article.
   (f)  As  used  in this section, unless the context requires otherwise,
 the term "subsidiary" shall have the same meaning as set forth in subdi-
 vision five of section one hundred forty-one  of  this  chapter,  except
 that (i) any reference therein to "bank holding company" shall be deemed
 to  refer  to a "state chartered banking institution" as defined in this
 section, and (ii) with respect to a credit union, the term  "subsidiary"
 as used in this section shall mean a "credit union organization".
   2. Pursuant to this section and notwithstanding any other provision of
 law,  except  as  otherwise  provided  in its charter, a state-chartered
 banking institution may exercise any federally permitted  power  of  its
 counterpart  federally  OR OUT-OF-STATE chartered banking institution as
 herein set forth:
   (a) a bank, private banker, or trust company may exercise any  [feder-
 ally]  permitted power of a national banking association OR OUT-OF-STATE
 BANK;
   (b) a savings bank or savings and loan association  may  exercise  any
 [federally] permitted power of a federal OR OUT-OF-STATE SAVINGS BANK OR
 savings AND LOAN association;
   (c) a foreign banking corporation acting through a branch may exercise
 any  [federally]  permitted  power  of  a  foreign bank acting through a
 federal OR OUT-OF-STATE branch OF A FOREIGN BANKING CORPORATION;
   (d) a foreign banking corporation acting through an agency  may  exer-
 cise  any [federally] permitted power of a foreign bank acting through a
 federal OR OUT-OF-STATE agency OF A FOREIGN BANKING CORPORATION;
   (e) a credit union may exercise any [federally] permitted power  of  a
 federal OR OUT-OF-STATE credit union.
   Nothing  contained  in  this section shall be deemed to permit a state
 chartered banking institution to exercise any [federally] POWER  permit-
 ted  [power] TO FEDERALLY OR OUT-OF-STATE CHARTERED BANKING INSTITUTIONS
 except in a manner consistent with the following provisions of  law,  in
 S. 6982                             3
 
 each case, as the terms contained in such provisions may be amended from
 time to time:
   (i) chapter one of the laws of nineteen hundred ninety-four;
   (ii) chapter nine of the laws of nineteen hundred ninety-six; and
   (iii)  sections fourteen-c, twenty-eight-b, thirty-nine and forty-four
 of this article, and sections six hundred five through six hundred thir-
 ty-four of this chapter, and with respect to savings banks  and  savings
 and  loan  associations,  respectively,  section  two  hundred forty and
 section three hundred ninety-six of this chapter.
   3. Except with respect to a federally OR OUT-OF-STATE CHARTERED  BANK-
 ING INSTITUTION permitted power approved pursuant to subdivision four of
 this section, prior to any state chartered banking institution initially
 exercising  any  federally OR OUT-OF-STATE CHARTERED BANKING INSTITUTION
 permitted power pursuant to this section, such banking institution shall
 make an application individually or with one  or  more  state  chartered
 banking institutions to the superintendent indicating that such institu-
 tion  or  institutions intend to exercise such federally OR OUT-OF-STATE
 CHARTERED BANKING INSTITUTION permitted power and  the  basis  on  which
 such  institution  or  institutions  believe such power is [a federally]
 permitted [power]. The superintendent shall have one hundred twenty days
 from receipt of the  application  to  determine  whether  it  meets  the
 requirements  of this section, provided that such period may be extended
 for an additional period of time [with the written consent of the appli-
 cant or applicants]. If such application meets the requirements of  this
 section,  the superintendent shall post such application upon the bulle-
 tin board of the department pursuant to section forty-two of this  arti-
 cle. If such application does not meet the requirements of this section,
 the  superintendent shall, within ten days of such determination, notify
 the applicant or applicants of the reasons why the application fails  to
 meet  the  requirements.  The superintendent shall determine, consistent
 with the standards set forth in subdivision five of this section, wheth-
 er to approve such application subject to such terms and  conditions  as
 the  superintendent  may  deem appropriate, in the superintendent's sole
 discretion. Such determination[,] shall be made  by  the  superintendent
 within  forty-five days after the posting of such application, provided,
 however, that the superintendent may notify the applicant or  applicants
 that  the  review of the application shall be extended for an additional
 period of time not exceeding sixty days after the posting of such appli-
 cation, and provided further that such period of time  may  be  extended
 for an additional period of time [with the written consent of the appli-
 cant  or applicants]. The superintendent shall not act upon the applica-
 tion prior to thirty days after such application has been posted. If the
 superintendent approves  such  application,  the  superintendent  shall,
 within  ten  days  of approving the application, notify the applicant or
 applicants in writing thereof, and the applicant or applicants may exer-
 cise  such  federally  OR  OUT-OF-STATE  CHARTERED  BANKING  INSTITUTION
 permitted  power subject to such terms and conditions as the superinten-
 dent may have approved. If the superintendent declines such application,
 the superintendent shall, within ten days of making such  determination,
 notify  the  applicant or applicants in writing thereof. An applicant or
 applicants may, upon the superintendent's failure to  comply  with  this
 section,  petition  the  superintendent to act upon the application. The
 failure of the superintendent to act upon the application or notify  the
 applicant or applicants, in writing, as to the reasons why action cannot
 be  taken within thirty days of receipt of such petition shall be deemed
 a denial of the application, which shall be subject to judicial  review.
 S. 6982                             4
 
 Notwithstanding  any other law, the superintendent may make the approval
 of an application under this section applicable to  one  or  more  addi-
 tional  state chartered banking institutions that are qualified to exer-
 cise  the  same  federally OR OUT-OF-STATE CHARTERED BANKING INSTITUTION
 permitted powers as the applicant or applicants pursuant to  subdivision
 two  of this section, subject to such terms and conditions as the super-
 intendent shall find necessary and appropriate.
   4. Notwithstanding any other law, the superintendent,  in  the  super-
 intendent's  discretion, may, when the superintendent deems it necessary
 and appropriate after considering the standards set forth in subdivision
 five of this section, by order, authorize one or  more  state  chartered
 banking  institutions  to exercise a federally OR OUT-OF-STATE CHARTERED
 BANKING INSTITUTION permitted power, subject to such  terms  and  condi-
 tions  as the superintendent shall find necessary and appropriate. Prior
 to issuing such order, the  superintendent  shall  post  notice  of  the
 superintendent's  intention  to issue such order upon the bulletin board
 of the department pursuant to section forty-two  of  this  article,  and
 shall not act upon such intention prior to thirty days after such notice
 has been posted.
   5. Prior to approving any application or proposal pursuant to subdivi-
 sion  three  or  four  of  this section, the superintendent shall make a
 finding that the approval of such application or proposal is:
   [(i)] (A) consistent with the policy of  the  state  of  New  York  as
 declared  in section ten of this article and thereby protects the public
 interest, including the interests of depositors,  creditors,  sharehold-
 ers, stockholders and consumers; and
   [(ii)] (B) necessary to achieve or maintain parity between state char-
 tered  banking  institutions  and their counterpart federally OR OUT-OF-
 STATE chartered banking institutions with  respect  to  rights,  powers,
 privileges, benefits, activities, loans, investments or transactions.
   6. A federally OR OUT-OF-STATE CHARTERED BANKING INSTITUTION permitted
 power  authorized  FOR A STATE CHARTERED BANKING INSTITUTION pursuant to
 this section shall not exceed and shall be limited  by  any  conditions,
 qualifications  or  restrictions  on  the same when exercised by [a] THE
 counterpart federally OR OUT-OF-STATE chartered banking institution  [of
 a  state chartered banking institution] unless the state chartered bank-
 ing institution is so authorized by other New York state law, or a rule,
 regulation or policy adopted pursuant to such other New York state  law,
 or  by  a judicial decision.   Notwithstanding any other law, the super-
 intendent may, at any time, impose by order any other terms  and  condi-
 tions as he or she finds necessary and proper including, but not limited
 to,  a  requirement that any federally OR OUT-OF-STATE CHARTERED BANKING
 INSTITUTION permitted power authorized by  this  section  be  exercised,
 conducted  or held in a subsidiary of a state chartered banking institu-
 tion. In the event that  federally  OR  OUT-OF-STATE  chartered  banking
 institutions  [located  in  the state of New York] lose the authority to
 exercise a  federally  OR  OUT-OF-STATE  CHARTERED  BANKING  INSTITUTION
 permitted  power,  based  upon which comparable authority was granted to
 the counterpart state chartered banking institutions  pursuant  to  this
 section,  then  unless  such  authority  is authorized by other New York
 state law, or a rule, regulation or  policy  adopted  pursuant  to  such
 other  New  York state law, or by a judicial decision, the authorization
 for such state chartered banking institutions pursuant to  this  section
 shall  be  deemed  revoked,  provided, however, that any such revocation
 shall be subject to such terms and conditions as may be imposed upon the
 S. 6982                             5
 
 counterpart federally OR OUT-OF-STATE chartered banking institutions  or
 by the superintendent.
   7.  (a)  In those instances where state chartered banking institutions
 are permitted to engage in the business of insurance  pursuant  to  this
 section,  they  shall  do  so  subject to all insurance laws, rules, and
 regulations; provided, however, that the superintendent may exempt state
 chartered banking institutions from any insurance  law,  rule  or  regu-
 lation  which  has  been preempted under federal law, rule or regulation
 for federally chartered banking institutions if such law, rule or  regu-
 lation  has been preempted because it applies to insurance activities of
 federally chartered banking institutions and not to those of other enti-
 ties.
   (b) In those instances where a federally  permitted  power  authorized
 pursuant  to  this  section  is  subject  to regulation by an agency, as
 defined in subdivision one of section  one  hundred  two  of  the  state
 administrative procedure act, other than the superintendent, then when a
 state  chartered  banking institution exercises such federally permitted
 power, unless it is so authorized by other New  York  state  law,  or  a
 rule, regulation or policy adopted pursuant to such other New York state
 law,  or  by  a  judicial decision, it shall do so subject to such regu-
 lation to the same extent and in the same manner as  such  agency  regu-
 lates  entities  other than state chartered banking institutions, except
 to the extent that federally  chartered  banking  institutions  are  not
 subject to such regulation.
   (c)  Any  state  chartered  banking institution or federally chartered
 banking institution and any subsidiary or  affiliate  thereof  which  is
 licensed  to  sell  insurance  in this state shall maintain separate and
 distinct books and  records  relating  to  its  insurance  transactions,
 including  all files relating to and reflecting consumer complaints, and
 such insurance books and records shall be made available to  the  super-
 intendent for inspection upon reasonable notice.
   8.  On  or  before  June  first of each year, the superintendent shall
 submit a report to the governor, the speaker of the assembly, the tempo-
 rary president of the senate, the minority leaders  of  the  senate  and
 assembly,  and the chairs and ranking minority members of the senate and
 assembly banks committees, which shall  include,  with  respect  to  the
 authority  provided  for  in this section, with respect to the preceding
 calendar year, (1) a listing of  state  chartered  banking  institutions
 that were established, (2) a listing of institutions that have converted
 to  a  federal charter or have been acquired by, or merged with, another
 banking institution, (3) the number of  New  York  banking  institutions
 exercising  the insurance activities authorized by this section, (4) the
 total number of New York chartered banking institutions located in  this
 state,  and  (5)  the  total  amount of assets of such chartered banking
 institutions by type.
   9. Any rules or regulations promulgated by the banking board  pursuant
 to  former  sections  fourteen-g and fourteen-h of this chapter prior to
 September first, two thousand seven, and any resolutions adopted by  the
 banking  board pursuant to this section after September first, two thou-
 sand seven and before the effective date of the chapter of the  laws  of
 two  thousand  eleven which amended this subdivision, including any such
 rules, regulations and resolutions which in  whole  or  in  part  impose
 conditions,  qualifications  or  restrictions on any federally permitted
 powers authorized thereby which exceed the conditions, qualifications or
 restrictions imposed on the same when exercised by a federally chartered
 banking institution, shall remain in full force and effect on  or  after
 S. 6982                             6

 such  date, unless any such rule, regulation or resolution is thereafter
 superseded, modified, or revoked by the superintendent pursuant  to  the
 provisions of subdivisions three and four of this section.
   §  2.  This act shall take effect immediately; provided, however, that
 the amendments to section 12-a of the banking law made by section one of
 this act shall not affect the repeal of such section and shall be deemed
 repealed therewith.

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