NY State Senate Bill 2023-S8915

Senate Bill S8915

2023-2024 Legislative Session

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

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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 27, 2024	referred to banks

2023-S8915 (ACTIVE) - Details

See Assembly Version of this Bill:: A9587
Current Committee:: Senate Banks
Law Section:: General Municipal Law
Laws Affected:: Amd §§10 & 11, Gen Muni L; add §454-a, Bank L

2023-S8915 (ACTIVE) - Summary

Establishes the savings bank, savings and loan association or credit union municipal deposit program; defines terms; provides that a credit union accepting deposits of public money is subject to certain limitations and 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.

2023-S8915 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S8915

SPONSOR: MARTINEZ
 
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

 
PURPOSE OR GENERAL IDEA OF BILL:

To expand the options for local governments to choose who they bank with
to include credit unions, savings banks, and savings and loan associ-
ations.

 
SUMMARY OF PROVISIONS:

Section 1. Paragraph c of subdivision 1 of Section 10 of the General
Municipal Law is amended to expand "public deposits" to mean deposits of
public funds in savings banks, savings and loan associations and credit
unions in addition to banks and trust companies.

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 are added to define the terms "credit union",
"savings bank" and "savings and loan association."

Section 3. Subdivisions 2 and 4 of Section 10 of the General Municipal
Law are amended relating to the authority of governing boards of every
local government to also be allowed to designate savings banks, saving
and loan associations and credit unions for deposits of public funds.

Section 4. Subdivision 2 of Section 11 of the General Municipal Law is
amended relating to local governments temporarily investing moneys not
required for immediate expenditures in special time interest-bearing
deposit accounts in, or certificates of deposits issued by a savings
bank, savings and loan association, or share certificates issued by a
credit union.

Section 5. Amends the Banking Law by adding a new Section 454-a relating
to "Deposits of public money with credit unions; security".

 
JUSTIFICATION:

Local governments are currently limited to utilizing commercial banks as
their banking option. Providing greater access for governments to choose
who they bank with, including credit unions and savings banks, will
create incentives for banks to offer governments better rates, lower
fees, and ultimately save taxpayer money. It would support increased
investments in underserved communities and immigrant communities, more
affordable housing lending, economic development, and increased finan-
cial literacy. For many local government entities, the ability to depos-
it funds in local credit unions is of significant value. Many rural
municipalities no longer have a commercial bank but do have a savings
bank or credit union.

Thirty-one states currently allow municipal banking choice. 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 their investors. Providing local governments with
the option to utilize credit unions, savings banks, and commercial banks
increases access, provides greater competition, and better convenience
for trustees of public funds. Additionally, enabling more choice in
depositories could reduce risk by spreading deposits over a greater
number of federally insured financial institutions. Unlike other not-
for-profits, credit unions do pay property taxes, school taxes, and
employer taxes.

This legislation simply offers local government leaders the option to
choose the financial institution that best fits their needs to serve the
community. If a local government entity feels a for-profit institution
is the best choice for taxpayer funds, they can continue working with a
commercial bank.

 
PRIOR LEGISLATIVE HISTORY:

2024: New Legislation.

 
FISCAL IMPLICATIONS:

To be determined.

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

2023-S8915 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8915
 
                             I N  S E N A T E
 
                              March 27, 2024
                                ___________
 
 Introduced  by Sen. MARTINEZ -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 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
 
   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-
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD14414-04-4
 S. 8915                             2
 
 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,  SAVINGS  BANKS,  SAVINGS AND LOAN ASSOCIATIONS, CREDIT
 UNIONS or trust companies for the deposit of public  funds  pursuant  to
 subparagraph (i) of this paragraph may, in its discretion, authorize the
 designated  bank,  SAVINGS  BANK,  SAVINGS AND LOAN ASSOCIATIONS, CREDIT
 UNIONS or trust [company] COMPANIES to arrange for the redeposit of  the
 local government's funds in one or more banking institutions, 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, SAVINGS BANK, SAVINGS  AND  LOAN  ASSOCI-
 ATION,  CREDIT UNION 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, SAVINGS
 BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION  or  trust  company  in
 accordance  with  this  subparagraph  and  held  in the designated bank,
 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
 ny in excess of the amount insured  by  the  federal  deposit  insurance
 corporation  OR  THE NATIONAL CREDIT UNION SHARE INSURANCE FUND, 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,  SAVINGS  BANK,  SAVINGS  AND LOAN ASSOCIATION, CREDIT
 UNION or trust company into deposit  accounts  in  banking  institutions
 pursuant  to  this subparagraph (plus accrued interest, if any) shall be
 insured by the federal deposit insurance  corporation  OR  THE  NATIONAL
 CREDIT UNION SHARE INSURANCE FUND.
   (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,  SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust
 company.  THE GOVERNING BOARD OF EVERY LOCAL GOVERNMENT SHALL FORWARD  A
 COPY OF SUCH RESOLUTION TO THE OFFICE OF THE STATE COMPTROLLER 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.
 S. 8915                             3
 
   b. 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
 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. 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, SAVINGS BANK, SAVINGS  AND  LOAN  ASSOCIATION,  CREDIT
 UNION,  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 offi-
 cer  authorized  by law to make such 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 deposi-
 tories. Such resolution shall specify the maximum amount  which  may  be
 kept  on  deposit  at any time with such bank, SAVINGS BANK, SAVINGS AND
 LOAN ASSOCIATION, CREDIT UNION, 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 certificate of  deposit  rate.  In
 those  instances  where there is such an agreement, its terms and condi-
 tions shall also be specified in the resolution. 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
 S. 8915                             4
 
 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-
 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, SAVINGS BANK, SAVINGS AND
 LOAN ASSOCIATION, CREDIT UNION or trust company located  and  authorized
 to do business in this state;
   (ii)  the  bank,  SAVINGS  BANK,  SAVINGS AND LOAN ASSOCIATION, CREDIT
 UNION or trust company arranges for the deposit of the moneys in certif-
 icates of deposit OR SHARE CERTIFICATES in one or  more  banking  insti-
 tutions,  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 OR THE NATIONAL CREDIT UNION SHARE
 INSURANCE FUND;
   (iv) the bank, SAVINGS BANK,  SAVINGS  AND  LOAN  ASSOCIATION,  CREDIT
 UNION  or  trust company acts as custodian for the local government with
 respect to such certificates of deposit issued  for  the  local  govern-
 ment'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,  SAVINGS  BANK,  SAVINGS  AND
 LOAN  ASSOCIATION,  CREDIT  UNION 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, SAVINGS BANK, SAVINGS  AND  LOAN  ASSOCIATION,  CREDIT
 UNION 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.
 S. 8915                             5

   §  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 ACCEPTING DEPOSITS OF PUBLIC MONEY IS SUBJECT TO THE  LIMI-
 TATIONS  PROVIDED  IN SECTION TEN OF THE GENERAL MUNICIPAL LAW AND 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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