NY State Senate Bill 2023-S7914

Senate Bill S7914

2023-2024 Legislative Session

Establishes the savings bank, savings and loan association or credit union municipal deposit program

download bill text pdf

Archive: Last Bill Status - In Senate Committee Local Government 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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Feb 13, 2024	reference changed to banks
Jan 03, 2024	referred to local government

2023-S7914 (ACTIVE) - Details

See Assembly Version of this Bill:: A9423
Current Committee:: Senate Local Government
Law Section:: General Municipal Law
Laws Affected:: Amd §§10 & 11, Gen Muni L; add §454-a, Bank L
Versions Introduced in Other Legislative Sessions:: 2009-2010: S8296
2011-2012: S1186
2013-2014: S2641
2015-2016: S1510
2017-2018: S3647
2019-2020: S4608
2021-2022: S4991
2025-2026: A1605

2023-S7914 (ACTIVE) - Summary

Establishes the savings bank, savings and loan association or credit union municipal deposit program.

2023-S7914 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S7914

SPONSOR: PARKER
 
TITLE OF BILL:

An act to amend the general municipal law and the banking law, in
relation to the establishment of a savings bank, savings and loan asso-
ciation or credit union municipal deposit program, and limiting deposits
of public funds in such institutions to two hundred fifty thousand
dollars

 
PURPOSE:

To allow savings banks, savings and loan associations and federal
savings banks to accept deposits from municipalities.

 
SUMMARY:

Section 1 amends paragraph c of subdivision 1 of section 10 of the
general municipal law to define public deposits.

Section 2 paragraphs f, g and h of subdivision 1 of section 10 of the

general municipal law are relettered paragraphs g, h and i and three new
paragraphs f, j and k defining credit union, savings bank, and savings
and loan association.

Section 3 amends subdivisions 2 and 4 of section 10, paragraph a of
subdivision 2, paragraph c of subdivision 2, and paragraph e of subdivi-
sion 4 of the general municipal law.

Section 4 amends subdivision 2 of section 11 of the general municipal
law.

Section 5 adds a new section 454-a to the banking law.

Section 6 sets forth the effective date of 90 days.

 
JUSTIFICATION:

The current law restricting municipal deposits to commercial banks is an
anachronism, stemming from the days when commercial banks were the most
secure option for these types of investments. At that time, savings
banks, savings & loan associations and credit unions, were smaller, less
secure entities that primarily served individual investors by providing
investment opportunities and offering loans, particularly mortgages to
residents of the communities they served.  However, savings banks,
savings & loan associations and credit unions are now on par with
commercial banks in many of the services they provide as well as the
security they offer to their investors. Allowing savings banks, savings
& loans and credit unions to accept municipal deposits would be benefi-
cial to the communities they are serving by offering a competitive
alternative to commercial banks, who with no real affiliation or commit-
ment are often a large corporate entity to the community they serve.

 
PRIOR LEGISLATIVE HISTORY:

2021-22: S.4991 - Referred to Local Government

2019-20: S.4608 - Referred to Local Government
2017-18: S.3647 - REFERRED TO LOCAL GOVERNMENT:

2015-16: S.1510 - Referred to Local Government

2013-14: S.2641 - Referred to Local Government

2011-12: S.1186 - Local Government

2009-10: S.8296C - Referred to Rules

2007-2008: S.3664 - Local Government

2005-2006: S.639 Local Government

 
FISCAL IMPLICATIONS:

None to the State.

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

2023-S7914 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7914
 
                             I N  S E N A T E
 
                              January 3, 2024
                                ___________
 
 Introduced  by  Sen.  PARKER -- read twice and ordered printed, and when
   printed to be committed to the Committee on Local Government
 
 AN ACT to amend the general  municipal  law  and  the  banking  law,  in
   relation  to  the  establishment  of  a savings bank, savings and loan
   association or credit union municipal deposit  program,  and  limiting
   deposits  of  public  funds  in such institutions to two hundred fifty
   thousand dollars
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Paragraph c 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:
   c. "Public deposits" shall mean deposits of public funds  in  a  bank,
 SAVINGS  BANK,  SAVINGS  AND  LOAN  ASSOCIATION,  CREDIT UNION, or trust
 company which are available for all  uses  generally  permitted  by  the
 bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, or trust
 company  to  the  depositing  local  government for actually and finally
 collected funds under the bank's, SAVINGS BANK'S, SAVINGS AND LOAN ASSO-
 CIATION'S, CREDIT UNION'S, or trust company's account agreement or poli-
 cies.
   § 2.  Paragraphs f, g and h of subdivision 1  of  section  10  of  the
 general municipal law are relettered paragraphs g, h and i and three new
 paragraphs f, j and k are added to read as follows:
   F. "CREDIT UNION" SHALL MEAN A STATE-CHARTERED CREDIT UNION AS DEFINED
 BY  SUBDIVISION  NINE  OF SECTION TWO OF THE BANKING LAW OR A FEDERALLY-
 CHARTERED CREDIT UNION AS DEFINED  BY  THE  FEDERAL  CREDIT  UNION  ACT,
 LOCATED AND AUTHORIZED TO DO BUSINESS IN NEW YORK.
   J.  "SAVINGS BANK" SHALL MEAN A SAVINGS BANK AS DEFINED BY SUBDIVISION
 FOUR OF SECTION TWO OF THE BANKING LAW OR ANY FEDERAL SAVINGS BANK.
   K. "SAVINGS AND LOAN ASSOCIATION" SHALL MEAN A SAVINGS AND LOAN  ASSO-
 CIATION  AS  DEFINED  BY SUBDIVISION EIGHT OF SECTION TWO OF THE BANKING
 LAW OR ANY FEDERAL SAVINGS AND LOAN ASSOCIATION.
   § 3. Subdivisions 2 and 4 of section 10 of the general municipal  law,
 as  amended  by chapter 623 of the laws of 1998, paragraph a of subdivi-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD07565-01-3
 S. 7914                             2
 
 sion 2 as amended by chapter 128 of the laws of 2012 and paragraph c  of
 subdivision  2  and paragraph (e) of subdivision 4 as further amended by
 section 104 of part A of chapter 62 of the laws of 2011, are amended  to
 read as follows:
   2.  a.  (i) The governing board of every local government shall desig-
 nate one or more banks, SAVINGS BANKS, SAVINGS  AND  LOAN  ASSOCIATIONS,
 CREDIT  UNIONS  or  trust companies for the deposit of public funds, the
 disposition of which is not otherwise provided for by law,  received  by
 the  chief fiscal officer or any other officer authorized by law to make
 deposits. Such designation shall be by resolution of the governing board
 or, in the case of a city, such other  body  as  may  be  authorized  or
 required by law to designate depositaries. Such resolution shall specify
 the maximum amount which may be kept on deposit at any time in each such
 bank,  SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust
 company. Such designations and amounts may be changed  at  any  time  by
 further resolution.
   (ii) The governing board of a local government that has designated one
 or  more banks or trust companies for the deposit of public funds pursu-
 ant to subparagraph (i)  of  this  paragraph  may,  in  its  discretion,
 authorize  the designated bank or trust company to arrange for the rede-
 posit of the local government's funds in  one  or  more  banking  insti-
 tutions,  as  defined  in  section  nine-r  of  the banking law, for the
 account of the local government, through  a  deposit  placement  program
 that meets all of the following conditions:
   (A)  On  or  after  the  date  that  the  local government's funds are
 received, the designated bank or trust  company  (I)  arranges  for  the
 redeposit  of  such  funds  into deposit accounts in one or more banking
 institutions and (II) serves as custodian for the local government  with
 respect to the funds redeposited into such accounts.
   (B)  Local  government  funds  deposited in a designated bank or trust
 company in accordance with this subparagraph and held in the  designated
 bank  or  trust  company  in excess of the amount insured by the federal
 deposit insurance corporation pending redeposit of the funds pursuant to
 this subparagraph shall be secured in accordance with subdivision  three
 of this section.
   (C)  The  full  amount  of  local  government funds redeposited by the
 designated bank or trust company into deposit accounts in banking insti-
 tutions pursuant to this subparagraph (plus accrued  interest,  if  any)
 shall be insured by the federal deposit insurance corporation.
   (D)  At  the same time that the money of the local government is rede-
 posited pursuant to this subparagraph, the selected depository  receives
 an  amount  of  deposits  from customers of other financial institutions
 pursuant to the deposit placement program that are at least equal to the
 amount of the local government's funds  redeposited  by  the  designated
 bank  or  trust company.   THE GOVERNING BOARD OF EVERY LOCAL GOVERNMENT
 SHALL FORWARD A COPY OF SUCH RESOLUTION TO THE OFFICE OF THE STATE COMP-
 TROLLER WHO SHALL RETAIN SUCH COPY UNTIL SUCH RESOLUTION IS  AMENDED  OR
 DISSOLVED.  A  COPY  OF  SUCH  RESOLUTION SHALL BE RETAINED BY THE STATE
 COMPTROLLER FOR RECORD KEEPING PURPOSES ONLY.
   b. PUBLIC FUNDS DEPOSITED INTO A SAVINGS BANK, FEDERAL  SAVINGS  BANK,
 CREDIT  UNION,  FEDERAL  CREDIT  UNION,  SAVINGS AND LOAN ASSOCIATION OR
 FEDERAL SAVINGS AND LOAN ASSOCIATION SHALL BE  LIMITED  TO  TWO  HUNDRED
 FIFTY THOUSAND DOLLARS.
   C.  Except as otherwise provided by law, all deposits shall be made to
 the credit of the local government.  The deposit of public funds  pursu-
 ant to this subdivision shall release the officer making the deposit and
 S. 7914                             3
 
 his  or  her  surety from any liability for loss of such public funds by
 reason of the default or insolvency of  any  such  bank,  SAVINGS  BANK,
 SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company.
   [c.]  D. The governing board of a local government, in which a banking
 development district has been designated by the superintendent of finan-
 cial services pursuant to section ninety-six-d of the banking  law,  may
 designate  a  bank,  trust  company  or  national  bank  located in such
 district for the deposit of public funds, the disposition  of  which  is
 not  otherwise provided for by law, received by the chief fiscal officer
 or other officer authorized by law to make such  deposits.  Such  desig-
 nation  shall be by resolution of the governing board or, in the case of
 a city, such other body as may be  authorized  or  required  by  law  to
 designate depositories. Such resolution shall specify the maximum amount
 which  may  be kept on deposit at any time with such bank, trust company
 or national bank located in  such  district.  Subject  to  an  agreement
 between  such governing board and such banking institution, public funds
 deposited in such banking institution may earn  a  fixed  interest  rate
 which  is at or below such banking institution's posted two year certif-
 icate of deposit rate. In those instances where there is such an  agree-
 ment,  its  terms  and  conditions shall also be specified in the resol-
 ution. Any such designation, amount,  or  agreement  provisions  may  be
 changed at any time by further resolution.
   4. (a) Notwithstanding any other provision of law to the contrary, the
 chief  fiscal officer, or other officer authorized by law to make depos-
 its, may, subject to the approval of  the  governing  body  of  a  local
 government,  by resolution, enter into a contract with a courier service
 for the purpose of causing the deposit of  public  funds  with  a  bank,
 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
 ny as provided in this section.
   (b)  The  entrusting of public funds for deposit pursuant to paragraph
 (a) of this subdivision shall release the officer entrusting the  public
 funds  to  the  courier service and his or her surety from any liability
 for loss of such public funds by the courier service in the  process  of
 delivering  such  public  funds  to  the  designated bank, SAVINGS BANK,
 SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company.
   (c) The local government authorizing the deposit of public funds by  a
 courier  service  pursuant  to  paragraph  (a) of this subdivision shall
 require the courier service to obtain a surety bond for the full  amount
 entrusted  to  the courier, payable to the local government and executed
 by an insurance company authorized to do business  in  this  state,  the
 claims  paying  ability of which is rated in the highest rating category
 by at least two nationally recognized statistical rating  organizations,
 to  insure  against  any  loss  of public funds entrusted to the courier
 service for deposit or failure to deposit the full amount  entrusted  to
 the courier.
   (d)  A deposit made by a courier on behalf of a local government shall
 be deemed to be a deposit made by the  chief  fiscal  officer  or  other
 officer entrusting such funds for purposes of the requirements contained
 in this section for securing public deposits.
   (e)  A  bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION
 or trust company may, from time to time and as agreed upon with a  local
 government, reimburse all or part of, but not more than, the actual cost
 incurred  by  the  local  government  in  transporting  cash, negotiable
 instruments or other items for deposit through a  courier  service.  Any
 such  reimbursement  agreement  shall  apply only to a specified deposit
 transaction, and may be subject to such terms,  conditions  and  limita-
 S. 7914                             4
 
 tions  as  the  bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT
 UNION or trust company deems necessary to  ensure  sound  banking  prac-
 tices,  including,  but not limited to, any terms, conditions or limita-
 tions  that  may  be required by the department of financial services or
 other federal or state authority.
   § 4. Subdivision 2 of section 11 of  the  general  municipal  law,  as
 amended  by  chapter  128  of  the  laws  of 2012, is amended to read as
 follows:
   2. a. The governing board of any local government or, if the governing
 board so delegates, the chief fiscal officer  or  other  officer  having
 custody  of  the  moneys  may temporarily invest moneys not required for
 immediate expenditure, except moneys the investment of which  is  other-
 wise  provided  for by law, either: (1) in special time INTEREST-BEARING
 deposit accounts in, or certificates  of  deposit  issued  by,  a  bank,
 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, OR SHARE CERTIFICATES ISSUED
 BY A CREDIT UNION or trust company located and authorized to do business
 in  this  state;  or  (2) in accordance with all of the following condi-
 tions:
   (i) the moneys are invested through a bank or  trust  company  located
 and authorized to do business in this state;
   (ii)  the bank or trust company arranges for the deposit of the moneys
 in certificates of deposit OR SHARE CERTIFICATES in one or more  banking
 institutions,  as  defined in section nine-r of the banking law, for the
 account of the local government;
   (iii) the full amount of principal and accrued interest of  each  such
 certificate  of  deposit  OR  SHARE  CERTIFICATE  must be insured by the
 federal deposit insurance corporation;
   (iv) the bank or trust company acts as custodian for the local govern-
 ment with respect to such certificates of deposit issued for  the  local
 government's account; and
   (v)  at the same time that the local government's moneys are deposited
 and the certificates of deposit OR SHARE CERTIFICATES are issued for the
 account of the local government, the bank or trust company  receives  an
 amount  of deposits from customers of other financial institutions equal
 to or greater than the amount  of  the  moneys  invested  by  the  local
 government through the bank or trust company.
   b.  For  any  investment made pursuant to paragraph a of this subdivi-
 sion, such time deposit account  or  certificate  of  deposit  OR  SHARE
 CERTIFICATES  shall be payable within such time as the proceeds shall be
 needed to meet expenditures for which  such  moneys  were  obtained  and
 provided further that such time deposit account or certificate of depos-
 it  OR  SHARE  CERTIFICATES be secured in the same manner as is provided
 for securing deposits of public funds by subdivision  three  of  section
 ten of this article.
   §  5. 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 SECTION TEN OF THE GENERAL MUNICIPAL LAW.  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.
   § 6. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.

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