S. 1992 2
private bankers, savings banks, safe deposit companies, savings and loan
associations, credit unions, PUBLIC BANKS ORGANIZED UNDER ARTICLE
THREE-C OF THIS CHAPTER, and investment companies.
§ 4. The banking law is amended by adding a new article 3-C to read as
follows:
ARTICLE 3-C
PUBLIC BANKS
SECTION 156. DEFINITIONS.
156-A. SPONSORS AND CORPORATE STRUCTURE.
156-B. GOVERNANCE.
156-C. PUBLIC BANK CHARTER REQUIREMENTS.
156-D. FINANCIAL AND OPERATIONS FRAMEWORK.
156-E. INSURANCE.
156-F. DEPOSITS.
156-G. PERMITTED ACTIVITIES OF THE PUBLIC BANK.
156-H. INCONSISTENCY WITH OTHER LAWS.
156-I. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES.
§ 156. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
1. "ADVISORY BOARD" MEANS A BOARD ESTABLISHED PURSUANT TO SECTION ONE
HUNDRED FIFTY-SIX-B OF THIS ARTICLE.
2. "AFFILIATE" MEANS:
(A) IN THE CASE OF A PERSON (OTHER THAN AN INDIVIDUAL), ANOTHER PERSON
THAT DIRECTLY, OR INDIRECTLY THROUGH ONE OF MORE INTERMEDIARIES,
CONTROLS, OR IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH SUCH
PERSON.
(B) IN THE CASE OF AN INDIVIDUAL, (I) ANY MEMBER OF THE IMMEDIATE
FAMILY OF SUCH INDIVIDUAL, INCLUDING PARENTS, SIBLINGS, SPOUSE AND CHIL-
DREN (INCLUDING THOSE BY ADOPTION) AND ANY OTHER PERSON WHO LIVES IN
SUCH INDIVIDUAL'S HOUSEHOLD; THE PARENTS, SIBLINGS, SPOUSE, OR CHILDREN
(INCLUDING THOSE BY ADOPTION) OF SUCH IMMEDIATE FAMILY MEMBER, AND IN
ANY SUCH CASE ANY TRUST WHOSE PRIMARY BENEFICIARY IS SUCH INDIVIDUAL OR
ONE OR MORE MEMBERS OF SUCH IMMEDIATE FAMILY AND/OR SUCH INDIVIDUAL'S
LINEAL DESCENDANTS; (II) THE LEGAL REPRESENTATIVE OR GUARDIAN OF SUCH
INDIVIDUAL OR OF ANY SUCH IMMEDIATE FAMILY MEMBER IN THE EVENT SUCH
INDIVIDUAL OR ANY SUCH IMMEDIATE FAMILY MEMBER BECOMES MENTALLY INCOMPE-
TENT; AND (III) ANY PERSON CONTROLLING, CONTROLLED BY OR UNDER COMMON
CONTROL WITH SUCH INDIVIDUAL.
(C) AS USED IN THIS DEFINITION, THE TERM "CONTROL," INCLUDING THE
CORRELATIVE TERMS "CONTROLLING," "CONTROLLED BY" AND "UNDER COMMON
CONTROL WITH," MEANS POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO
DIRECT OR CAUSE THE DIRECTION OF MANAGEMENT OR POLICIES (WHETHER THROUGH
OWNERSHIP OF SECURITIES OR ANY PARTNERSHIP OR OTHER OWNERSHIP INTEREST,
BY CONTRACT OR OTHERWISE) OF A PERSON. SUCH CONTROL SHALL BE PRESUMED TO
EXIST WHERE A PERSON OWNS A TEN PERCENT OR GREATER OWNERSHIP INTEREST IN
ANOTHER PERSON.
(D) "PERSON" SHALL BE CONSTRUED BROADLY AND SHALL INCLUDE, WITHOUT
LIMITATION, AN INDIVIDUAL, A PARTNERSHIP, A LIMITED LIABILITY COMPANY, A
CORPORATION, AN ASSOCIATION, A JOINT STOCK COMPANY, A TRUST, A JOINT
VENTURE, AN UNINCORPORATED ORGANIZATION AND A GOVERNMENTAL ENTITY OR ANY
DEPARTMENT, AGENCY OR POLITICAL SUBDIVISION THEREOF.
3. "BANK" MEANS ANY CORPORATION, OTHER THAN A TRUST CORPORATION,
ORGANIZED UNDER OR SUBJECT TO THE PROVISIONS OF THIS ARTICLE OR ARTICLE
THREE OF THIS CHAPTER.
4. "BOARD" MEANS A BOARD OF DIRECTORS OR BOARD OF MANAGERS OF A PUBLIC
BANK.
S. 1992 3
5. "COMMUNITY BANKING EXPERIENCE" MEANS CURRENT OR PAST EMPLOYMENT
EXPERIENCE AS AN OFFICER, DIRECTOR OR EXECUTIVE, OR CURRENT OR PAST
EMPLOYMENT EXPERIENCE IN A SENIOR LEADERSHIP ROLE AT ANY OF THE FOLLOW-
ING:
(A) A COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION THAT IS A CREDIT
UNION, LOAN FUND, MINORITY DEPOSITORY INSTITUTION, UNION CONTROLLED BANK
OR LOCALLY BASED COMMUNITY BANK; OR
(B) A CREDIT UNION, LOAN FUND, MINORITY DEPOSITORY INSTITUTION, UNION
CONTROLLED BANK OR LOCALLY BASED COMMUNITY BANK THAT OTHERWISE SERVES
LOW-INCOME, RURAL OR OTHER UNDERSERVED OR ECONOMICALLY DISTRESSED COMMU-
NITIES.
6. "COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION" MEANS AN ENTITY THAT
HAS BEEN CERTIFIED AS MEETING THE ELIGIBILITY REQUIREMENTS OF SECTION
1805.201 OF TITLE 12 OF THE CODE OF FEDERAL REGULATIONS.
7. "DEPOSIT" MEANS THE PLACING OF MONEY WITH A PUBLIC BANK TO BE WITH-
DRAWN UPON THE DEPOSITOR'S DEMAND OR UNDER THE RULES AND REGULATIONS
AGREED UPON BETWEEN THE BANK AND THE DEPOSITOR.
8. "ECONOMICALLY DISTRESSED COMMUNITIES" MEANS THOSE COMMUNITIES WHERE
AT LEAST THIRTY PERCENT OF RESIDENTS HAVE INCOMES THAT ARE LESS THAN THE
NATIONAL POVERTY LEVEL OR WHERE THE UNEMPLOYMENT RATE IS GREATER THAN
THE NATIONAL UNEMPLOYMENT RATE; OR ECONOMIC OPPORTUNITY ZONE DESIGNATED
COMMUNITIES, EXCLUDING CONTIGUITY ECONOMIC OPPORTUNITIES ZONES.
9. "INDEPENDENT" MEANS, WITH RESPECT TO A MEMBER OF A PUBLIC BANK'S
BOARD OF DIRECTORS, BOARD OF MANAGERS, OR ADVISORY BOARD, AN INDIVIDUAL
WHO:
(A) AT THE TIME OF SUCH INDIVIDUAL'S ELECTION TO THE BOARD OF DIREC-
TORS, BOARD OF MANAGERS, OR ADVISORY BOARD OF A PUBLIC BANK, IS NOT A
HOLDER OF ANY PUBLIC OFFICE WITHIN THE SPONSOR; AND
(B) WITHIN THE PAST FIVE YEARS HAS NOT BEEN A HOLDER OF PUBLIC OFFICE
WITHIN SUCH SPONSOR.
10. "LOCAL ELECTED OFFICIAL" MEANS ANY OFFICER ELECTED TO A POSITION
WITHIN A COUNTY, CITY, TOWN, VILLAGE, SCHOOL DISTRICT OR DISTRICT CORPO-
RATION, OR ANY AGENCY, DEPARTMENT, DIVISION, BOARD, COMMISSION OR BUREAU
THEREOF; PROVIDED, THAT, SUCH TERM SHALL NOT INCLUDE ANY JUDGE OR
JUSTICE OF A COURT.
11. "MINORITY DEPOSITORY INSTITUTION" MEANS ANY DEPOSITORY INSTITUTION
THAT IS OWNED IN ANY OF THE FOLLOWING MANNERS:
(A) A PRIVATELY OWNED INSTITUTION OF WHICH FIFTY-ONE PERCENT IS OWNED
BY ONE OR MORE INDIVIDUALS WHO ARE MINORITIES;
(B) A PUBLICLY OWNED INSTITUTION OF WHICH FIFTY-ONE PERCENT OF THE
STOCK IS OWNED BY ONE OR MORE MINORITIES; OR
(C) AN INSTITUTION OTHERWISE DESIGNATED AS A MINORITY DEPOSITORY
INSTITUTION BY THE INSTITUTION'S APPLICABLE FEDERAL REGULATORS.
12. "MINORITY" MEANS ANY PERSON WHO IS A MEMBER OF ONE OF THE FOLLOW-
ING GROUPS: (A) BLACK PERSONS HAVING ORIGINS IN ANY OF THE BLACK AFRICAN
RACIAL GROUPS; (B) HISPANIC/LATINO PERSONS OF MEXICAN, PUERTO RICAN,
DOMINICAN, CUBAN, CENTRAL OR SOUTH AMERICAN OF EITHER INDIAN OR HISPANIC
ORIGIN, REGARDLESS OF RACE; (C) NATIVE AMERICAN OR ALASKAN NATIVE
PERSONS HAVING ORIGINS IN ANY OF THE ORIGINAL PEOPLES OF NORTH AMERICA;
AND (D) ASIAN AND PACIFIC ISLANDER PERSONS HAVING ORIGINS IN ANY OF THE
FAR EAST COUNTRIES, SOUTH EAST ASIA, THE INDIAN SUBCONTINENT OR THE
PACIFIC ISLANDS.
13. "PUBLIC BANK" MEANS A NOT-FOR-PROFIT CORPORATION, A STOCK CORPO-
RATION, INCLUDING A PUBLIC BENEFIT CORPORATION INCORPORATED PURSUANT TO
ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW, OR LIMITED LIABILITY
COMPANY THAT IS CHARTERED PURSUANT TO THIS ARTICLE AS A BANK. A PUBLIC
S. 1992 4
BANK FORMED AS A STOCK CORPORATION OR A NOT-FOR-PROFIT CORPORATION SHALL
BE A PUBLIC CORPORATION, AND A PUBLIC BANK FORMED AS A LIMITED LIABILITY
CORPORATION SHALL BE A PUBLIC LIMITED LIABILITY COMPANY.
14. "PUBLIC BANK APPLICATION DOCUMENTS" MEANS A BUSINESS PLAN AND
APPLICATION TO BE SUBMITTED TO THE DEPARTMENT PURSUANT TO SECTION ONE
HUNDRED FIFTY-SIX-C OF THIS ARTICLE FOR THE PURPOSE OF CHARTERING A
PUBLIC BANK.
15. "PUBLIC CORPORATION" MEANS A STOCK CORPORATION, INCLUDING A PUBLIC
BENEFIT CORPORATION INCORPORATED PURSUANT TO ARTICLE SEVENTEEN OF THE
BUSINESS CORPORATION LAW, OR A NOT-FOR-PROFIT CORPORATION THAT IS INCOR-
PORATED, OWNED AND CONTROLLED BY A COUNTY, CITY, TOWN OR VILLAGE.
16. "PUBLIC FUNDS" MEANS FUNDS OF THE SPONSOR.
17. "PUBLIC LIMITED LIABILITY COMPANY" MEANS A LIMITED LIABILITY
COMPANY THAT IS INCORPORATED, OWNED AND CONTROLLED BY A COUNTY, CITY,
TOWN OR VILLAGE.
18. "STATE OR LOCAL AUTHORITY" MEANS A LOCAL GOVERNMENT OR AGENCY, A
GROUP OF TWO OR MORE LOCAL GOVERNMENTS OR AGENCIES ACTING TOGETHER,
SPECIAL DISTRICT, A GROUP OF TWO OR MORE SPECIAL DISTRICTS ACTING
TOGETHER, STATE AGENCY, OR A GROUP OF TWO OR MORE STATE AGENCIES ACTING
TOGETHER.
19. "SPONSOR" MEANS ONE OR MORE CITIES, TOWNS, VILLAGES AND/OR COUN-
TIES WITHIN THE STATE OF NEW YORK WITH AN AGGREGATE POPULATION OF AT
LEAST ONE HUNDRED THOUSAND RESIDENTS.
§ 156-A. SPONSORS AND CORPORATE STRUCTURE. A PUBLIC BANK MAY BE A
NOT-FOR-PROFIT CORPORATION, A LIMITED LIABILITY COMPANY OR A BUSINESS
CORPORATION THAT IS FORMED BY A SPONSOR, SUBJECT TO THE FOLLOWING CORPO-
RATE STRUCTURE REQUIREMENTS:
1. IF INCORPORATED AS A BUSINESS CORPORATION, A PUBLIC BANK MAY, BUT
IS NOT REQUIRED TO:
(A) INCORPORATE AS A PUBLIC BENEFIT CORPORATION UNDER ARTICLE SEVEN-
TEEN OF THE BUSINESS CORPORATION LAW; OR
(B) IDENTIFY IN ITS CERTIFICATE OF INCORPORATION A SPECIFIC PUBLIC
BENEFIT, CONSISTENT WITH THE PROVISIONS OF ARTICLE SEVENTEEN OF THE
BUSINESS CORPORATION LAW. SPECIFIC PUBLIC BENEFITS WITHIN THE MEANING OF
THIS SECTION SHALL INCLUDE, BUT ARE NOT LIMITED TO, STRENGTHENING LOCAL
ECONOMIES, SUPPORTING COMMUNITY ECONOMIC DEVELOPMENT, ADDRESSING INFRAS-
TRUCTURE AND HOUSING NEEDS FOR LOCALITIES AND PROVIDING BANKING SERVICES
TO UNBANKED OR UNDERBANKED COMMUNITIES.
2. THE SPONSOR SHALL BE (A) THE SOLE MEMBER OF A NOT-FOR-PROFIT PUBLIC
BANK, (B) THE MAJORITY AND CONTROLLING MEMBER OF A LIMITED LIABILITY
COMPANY PUBLIC BANK, AND (C) THE MAJORITY AND CONTROLLING SHAREHOLDER OF
A CORPORATION PUBLIC BANK.
3. A PUBLIC BANK ORGANIZED AS A LIMITED LIABILITY COMPANY OR CORPO-
RATION MAY HAVE OTHER MEMBERS OR SHAREHOLDERS BUT SUCH OTHER MEMBERS OR
SHAREHOLDERS SHALL ONLY BE PASSIVE MEMBERS OR SHAREHOLDERS AND SHALL NOT
HAVE ANY CONSENT OR VETO RIGHTS OVER ANY DECISIONS, ANY REMOVAL RIGHTS
OF THE SPONSOR, ANY RIGHTS TO ELECT OR CHOOSE THE BOARD OR ANY VOTING
RIGHTS WHATSOEVER.
4. PASSIVE MEMBERS OR PASSIVE SHAREHOLDERS SHALL BE ALLOWED TO INVEST
CAPITAL INTO A PUBLIC BANK SO LONG AS SUCH PASSIVE MEMBERS OR PASSIVE
SHAREHOLDERS ARE APPROVED BY THE SPONSOR AND THE SPONSOR MAINTAINS THE
RIGHT TO DIRECT THE PUBLIC BANK TO PURCHASE THE INTERESTS OF ANY PASSIVE
MEMBERS OR SHAREHOLDERS AT A MARKET PRICE DETERMINED BY AN INDEPENDENT
THIRD PARTY SELECTED BY THE SPONSOR AT ANY TIME.
5. THE SPONSOR SHALL OWE NO FIDUCIARY DUTY NOR ANY OTHER DUTY TO
PASSIVE INVESTORS. NO PASSIVE INVESTOR MAY PURSUE LEGAL ACTION AGAINST
S. 1992 5
THE SPONSOR FOR ANY REASON OTHER THAN FAILURE TO DISTRIBUTE FUNDS
REQUIRED TO BE DISTRIBUTED PURSUANT TO GOVERNING DOCUMENTS OF THE PUBLIC
BANK.
§ 156-B. GOVERNANCE. 1. THE PUBLIC BANK SHALL BE GOVERNED BY THE
BOARD. SUCH BOARD SHALL BE COMPOSED OF NINE DIRECTORS OR ELEVEN DIREC-
TORS. EACH DIRECTOR SHALL LIVE WITHIN THE JURISDICTIONAL BOUNDARIES OF
THE SPONSOR.
2. THE SPONSOR SHALL DETERMINE THE PUBLIC BANK'S INITIAL BOARD IN THE
FOLLOWING MANNER:
(A) THE MAYOR, OR HEAD OF THE EXECUTIVE BRANCH OF GOVERNMENT OF THE
SPONSOR OR SPONSORS, SHALL APPOINT THREE MEMBERS, AT LEAST ONE OF WHOM
SHALL HAVE COMMUNITY BANKING EXPERIENCE AND AT LEAST ONE OF WHOM SHALL
BE INDEPENDENT;
(B) THE CITY COUNCIL, OR LEGISLATIVE BRANCH OF THE SPONSOR OR SPONSORS
SHALL APPOINT TWO MEMBERS, AT LEAST ONE OF WHOM SHALL HAVE COMMUNITY
BANKING EXPERIENCE AND AT LEAST ONE OF WHOM SHALL BE INDEPENDENT;
(C) THE TREASURER, CONTROLLER OR ELECTED OFFICIAL CHARGED WITH OVER-
SEEING THE SPONSOR OR SPONSORS' FINANCES AND THE ADMINISTRATION OF
PUBLIC FUNDS SHALL APPOINT ONE MEMBER WHO SHALL HAVE COMMUNITY BANKING
EXPERIENCE AND BE INDEPENDENT; AND
(D) THE BOARD MEMBERS SELECTED PURSUANT TO PARAGRAPHS (A) THROUGH (C)
OF THIS SUBDIVISION SHALL, PURSUANT TO A TWO-THIRDS MAJORITY VOTE,
APPOINT AT THEIR DISCRETION AND IN ACCORDANCE WITH SUBDIVISIONS FIVE AND
SIX OF THIS SECTION, EITHER THREE OR FIVE ADDITIONAL BOARD MEMBERS, WITH
THE PURPOSE OF MAXIMIZING BOARD DIVERSITY TO INCLUDE A VARIETY OF THE
SPONSOR'S COMMUNITY STAKEHOLDERS, INCLUDING COMMUNITY-BASED ORGANIZA-
TIONS, LABOR ORGANIZATIONS AND THOSE GROUPS PRIORITIZED BY THE PUBLIC
BANK'S UNDERWRITING AND FINANCIAL POLICIES, AS REFLECTED IN SECTION ONE
HUNDRED FIFTY-SIX-G OF THIS ARTICLE. FOR ANY SPONSOR THAT IS ALSO A CITY
WITH A POPULATION OF ONE MILLION OR MORE, THE BOARD MEMBERS SELECTED
PURSUANT TO PARAGRAPHS (A) THROUGH (C) OF THIS SUBDIVISION MAY, PURSUANT
TO A TWO-THIRDS MAJORITY VOTE, APPOINT EITHER SEVEN OR NINE ADDITIONAL
BOARD MEMBERS TO MAXIMIZE BOARD DIVERSITY.
3. THE BOARD SHALL ADOPT BYLAWS, GOVERNING DOCUMENTS OR THEIR FUNC-
TIONAL EQUIVALENTS AS REQUIRED BY THE NOT-FOR-PROFIT CORPORATION LAW,
BUSINESS CORPORATION LAW, OR LIMITED LIABILITY COMPANY LAW, AS APPLICA-
BLE, BASED ON THE CORPORATE STRUCTURE OF THE PUBLIC BANK. SUCH GOVERNING
DOCUMENTS SHALL INCLUDE:
(A) PROCEDURES TO REMOVE DIRECTORS CONSISTENT WITH THIS ARTICLE;
(B) PROCEDURES FOR REPLACING DIRECTORS CONSISTENT WITH THIS ARTICLE;
(C) A PROVISION REQUIRING THAT THE BOARD MEMBERSHIP OF ANY BOARD
MEMBER WHO ALSO SERVES AS A PUBLIC OFFICIAL OR LOCAL ELECTED OFFICIAL OF
A SPONSOR SHALL TERMINATE IMMEDIATELY UPON SUCH BOARD MEMBER CEASING TO
HOLD SUCH PUBLIC OFFICE; AND
(D) APPROPRIATE TERM LIMITS FOR BOARD MEMBERS, CONSISTENT WITH PARA-
GRAPH (C) OF THIS SUBDIVISION.
4. AT LEAST ONE BOARD MEMBER APPOINTED PURSUANT TO PARAGRAPHS (A) AND
(B) OF SUBDIVISION TWO OF THIS SECTION SHALL BE A REPRESENTATIVE OF ONE
OF THE COMMUNITY STAKEHOLDERS PRIORITIZED BY THE PUBLIC BANK'S UNDER-
WRITING AND FINANCIAL POLICIES AS REFLECTED IN SECTION ONE HUNDRED
FIFTY-SIX-G OF THIS ARTICLE.
5. WHEN A BOARD MEMBER RESIGNS OR CEASES TO BE A BOARD MEMBER FOR ANY
REASON, THE INDIVIDUAL APPOINTED TO REPLACE SUCH BOARD MEMBER SHALL BE
APPOINTED IN ACCORDANCE WITH THE SAME SELECTION CRITERIA AND PROCESS BY
WHICH SUCH DEPARTING MEMBER WAS APPOINTED UNDER SUBDIVISION TWO OF THIS
SECTION.
S. 1992 6
6. THE SPONSOR AND BOARD WILL TAKE ALL STEPS NECESSARY TO ENSURE THAT
THE COMPOSITION OF THE BOARD REFLECTS THE COMPOSITION OF THE POPULATION
IN TERMS OF PEOPLE OF COLOR AND WOMEN.
7. A MAJORITY OF THE BOARD SHALL BE COMPOSED OF INDEPENDENT DIRECTORS
WHO ARE NOT GOVERNMENT EMPLOYEES. THE CHAIR OF THE BOARD MUST BE AN
INDEPENDENT DIRECTOR.
8. THE BOARD SHALL SET POLICY FOR THE PUBLIC BANK; PROVIDED THAT
NEITHER THE BOARD NOR ANY DIRECTOR SHALL BE INVOLVED IN DAY TO DAY DECI-
SIONS REGARDING PARTICULAR INSTRUMENTS. MANAGEMENT DECISIONS SHALL BE
MADE INDEPENDENTLY BY BANK MANAGEMENT WHO SHALL BE APPOINTED BY THE
BOARD CONSISTENT WITH BANK POLICY.
9. THE BOARD MAY ESTABLISH ONE OR MORE COMMITTEES TO MANAGE THE PUBLIC
BANK.
10. THE BOARD SHALL ADHERE TO ALL REPORTING REQUIREMENTS UNDER THIS
CHAPTER REGARDING THE PUBLIC BANK'S FINANCIAL CONDITION.
11. A PUBLIC BANK SHALL FORM ONE OR MORE ADVISORY BOARDS IN ORDER TO
PROVIDE ADVICE AND CARRY OUT ANY OTHER DUTIES, AS DETERMINED BY THE
SPONSOR, INCLUDING THE FOLLOWING:
(A) PROVIDE INPUT TO THE BOARD REGARDING WAYS TO ACCOMPLISH ITS
MISSION;
(B) ENSURE THAT THE BOARD FOLLOWS STRICT ETHICAL STANDARDS AS DETER-
MINED BY THE SPONSOR IN THE PUBLIC BANK'S GOVERNING DOCUMENTS, THROUGH
THE APPROVAL OF BYLAWS OR A CODE OF CONDUCT TO GOVERN THE BOARD'S
MANAGEMENT;
(C) ENSURE THAT THE PUBLIC BANK'S OPERATIONS ARE CONSISTENT WITH
SOCIAL EQUITY PRINCIPLES, INCLUDING RACIAL, GENDER, AND ENVIRONMENTAL
JUSTICE AND INDIGENOUS RIGHTS;
(D) PROVIDE TECHNICAL ADVICE AS NEEDED; AND
(E) PROVIDE AN ANNUAL REPORT TO THE PUBLIC AND THE SPONSOR EVALUATING
THE PUBLIC BANK'S PERFORMANCE IN RELATION TO ITS MISSION, ITS ETHICAL
STANDARDS AND ITS FINANCIAL SOUNDNESS.
12. THE SPONSOR WILL DETERMINE THE INITIAL ADVISORY BOARD MEMBERSHIP,
THE TERM OF ITS MEMBERS, THE QUALIFICATIONS OF MEMBERS AND THE METHOD
FOR REPLACING ITS MEMBERS, PROVIDED THAT A MAJORITY OF EACH ADVISORY
BOARD IS MADE UP OF INDEPENDENT MEMBERS WHO ARE NOT GOVERNMENTAL EMPLOY-
EES. THE ADVISORY BOARD SHALL BE COMPOSED OF NO FEWER THAN FIVE AND NO
MORE THAN ELEVEN MEMBERS. ANY ADVISORY BOARD MEMBER SHALL LIVE WITHIN
THE JURISDICTIONAL BOUNDARY OF THE PUBLIC BANK'S SPONSOR OR ITS MEMBERS
OR SHAREHOLDERS.
13. ANY ACTION REQUIRED OR PERMITTED BY THIS CHAPTER TO BE TAKEN BY
THE BOARD OR AN ADVISORY BOARD MAY BE TAKEN AT A DULY CALLED MEETING OF
SUCH BOARD IN ACCORDANCE WITH ITS GOVERNING DOCUMENTS OR WITHOUT A MEET-
ING IF THE ACTION TAKEN IS EVIDENCED BY ONE OR MORE WRITTEN CONSENTS
DESCRIBING THE ACTION TAKEN AND SIGNED BY EACH MEMBER OF THE BOARD OR
ADVISORY BOARD.
§ 156-C. PUBLIC BANK CHARTER REQUIREMENTS. 1. A PROPOSED PUBLIC BANK
SHALL BE CHARTERED BY THE DEPARTMENT UPON SUBMISSION OF THE PUBLIC BANK
APPLICATION DOCUMENTS THAT DEMONSTRATE THE FOLLOWING:
(A) THE PURPOSE OF THE PROPOSED PUBLIC BANK IS CONSISTENT WITH THE
PURPOSES REQUIRED UNDER THIS ARTICLE;
(B) MINIMUM INITIAL CAPITALIZATION IS NO LESS THAN TEN PERCENT OF THE
PUBLIC BANK'S PROJECTED LENDING TOTAL FOR THE FIRST YEAR OF OPERATION
AFTER RECEIPT OF ITS CHARTER;
(C) ADEQUATE RESERVES AND LIQUIDITY EXIST TO COVER THE PUBLIC BANK'S
OBLIGATIONS RELATING TO DEPOSIT WITHDRAWALS AND DEFAULTED LOANS;
(D) THE QUALIFICATIONS OF THE PROPOSED DIRECTORS;
S. 1992 7
(E) THE QUALIFICATIONS OF THE PROPOSED CHIEF EXECUTIVE OFFICER AND
MANAGEMENT TEAM;
(F) AN ORGANIZATIONAL CHART;
(G) POLICIES AND PROCEDURES PROHIBITING ANY ELECTED OFFICIAL, OR
AFFILIATES OF SUCH OFFICIALS, FROM RECEIVING A LOAN OR OTHER FINANCIAL
BENEFIT FROM THE PUBLIC BANK;
(H) PROCEDURES FOR OBTAINING FIDELITY INSURANCE;
(I) SUFFICIENT INTERNAL AUDITS AND CONTROLS;
(J) A PRO FORM A FINANCIAL STATEMENT PROJECTING ASSETS, LIABILITIES,
INCOME AND EXPENSES FOR NO LESS THAN A THREE YEAR PERIOD;
(K) NO MATERIAL NEGATIVE IMPACT OF THE PUBLIC BANK ON THE SPONSOR'S
FINANCIAL CONDITION;
(L) A PLAN TO COMPLY WITH THE COMMUNITY REINVESTMENT ACT AND FAIR
LENDING REQUIREMENTS, PURSUANT TO SECTION TWO HUNDRED NINETY-SIX-A OF
THE EXECUTIVE LAW;
(M) A CERTIFICATE OF INCORPORATION;
(N) A NARRATIVE BUSINESS PLAN DESCRIBING THE BANKING SERVICES TO BE
PROVIDED; AND
(O) SUCH OTHER INFORMATION AS THE DEPARTMENT MAY REQUIRE.
2. THE PUBLIC BANK MAY BUT SHALL NOT BE REQUIRED TO INSURE OR COLLA-
TERALIZE DEPOSITS FROM THE SPONSOR OR ANY OTHER GOVERNMENTAL ENTITY WITH
INSURANCE OR COLLATERAL DETERMINED BY THE PUBLIC BANK IN ITS GOVERNING
DOCUMENTS.
3. THE PUBLIC BANK APPLICATION DOCUMENTS ARE NOT REQUIRED TO PROVIDE
THAT THE PUBLIC BANK WILL RECEIVE DEPOSITS IN ITS INITIAL THREE YEARS OF
OPERATION, AND NOT RECEIVING DEPOSITS IN THE INITIAL THREE YEARS OF
OPERATION SHALL NOT BE A REASON FOR DISAPPROVAL BY THE SUPERINTENDENT.
4. PUBLIC BANK APPLICATION DOCUMENTS ARE NOT REQUIRED TO INCLUDE A
MARKET, PUBLIC CONVENIENCE AND ADVANTAGE, COMPETITIVE IMPACT OR A BANK
PREMISES ANALYSIS OR ADDRESS ANY OTHER MATTERS OTHER THAN THOSE LISTED
IN SUBDIVISION ONE OF THIS SECTION.
§ 156-D. FINANCIAL AND OPERATIONS FRAMEWORK. 1. THE PUBLIC BANK MAY
RAISE CAPITAL THROUGH ANY LEGAL MEANS, INCLUDING BUT NOT LIMITED TO:
(A) THE RECEIPT AND LEVERAGE OF PUBLIC DEPOSITS,
(B) SPONSOR EQUITY CONTRIBUTIONS,
(C) PASSIVE MEMBER OR SHAREHOLDER EQUITY CONTRIBUTIONS,
(D) SALE OF CORPORATE DEBT TO SPONSOR, AND
(E) SALE OF CORPORATE DEBT TO THIRD PARTIES.
2. THE PUBLIC BANK SHALL HAVE ALL THE RIGHTS AND POWERS CONFERRED BY
ARTICLES THREE AND FIFTEEN OF THIS CHAPTER, WHICH MUST BE EXERCISED IN A
MANNER CONSISTENT WITH ITS MISSION.
3. ALL LENDING AND ACTIONS OF THE PUBLIC BANK SHALL ABIDE BY THE
UNITED NATIONS DECLARATION ON THE RIGHTS OF INDIGENOUS PEOPLES. CONSE-
QUENTLY, ALL PUBLIC BANKS THAT ARE FORMED BY A SPONSOR THAT INCLUDES
INDIGENOUS COMMUNITIES WILL INCLUDE A REPRESENTATIVE NUMBER OF INDIGE-
NOUS PEOPLE ON THE BOARD AND ADVISORY COMMITTEE OF THE PUBLIC BANK AND
PRIORITIZE LOANS TO INDIGENOUS COMMUNITIES.
4. THE SPONSOR MAY PROHIBIT INVESTMENTS AND LOANS THAT MAY BENEFIT ANY
TYPE OF DESIGNATED BUSINESS INCLUDING THE FOSSIL FUEL INDUSTRY, WEAPONS
OR GUN MANUFACTURERS, MILITARY SYSTEMS COMPANIES, PRIVATE PRISONS, IMMI-
GRATION DETENTION FACILITIES, COMPANIES ENGAGED IN OFFSHORE TAX AVOID-
ANCE OR EXPLOITATIVE BUSINESS OR LABOR PRACTICES OR THE TOBACCO INDUS-
TRY, ALL AS DETERMINED BY THE SPONSOR IN THE PUBLIC BANK'S GOVERNING
DOCUMENTS.
S. 1992 8
5. THE PUBLIC BANK SHALL BE EXEMPT FROM STATE, COUNTY, AND MUNICIPAL
TAXES AND LICENSES, OF ANY KIND, INCLUDING INCOME, CAPITAL GAIN, REAL
ESTATE AND MORTGAGE RECORDING TAXES.
6. THE PUBLIC BANK SHALL NOT BE SOLD TO OR MERGED WITH ANOTHER ENTITY
UNLESS SUCH ENTITY HAS A PUBLIC BANK CHARTER AND THE SALE OR MERGER HAS
BEEN APPROVED BY THE SUPERINTENDENT.
§ 156-E. INSURANCE. A PUBLIC BANK SHALL OBTAIN INSURANCE OF DEPOSITS
ONLY TO THE EXTENT THAT IT RECEIVES DEPOSITS FROM THE GENERAL PUBLIC.
§ 156-F. DEPOSITS. 1. THE BOARD SHALL DEVELOP A PLAN, SUBJECT TO
APPROVAL BY THE ADVISORY BOARD, TO ACCEPT AND MANAGE DEPOSITS.
2. THE COMPTROLLER OR CHIEF FINANCIAL OFFICER OF THE SPONSOR SHALL BE
AUTHORIZED TO DEPOSIT PUBLIC FUNDS IN THE PUBLIC BANK, PROVIDED THAT THE
PUBLIC BANK'S BUSINESS PLAN PERMITS THE COMPTROLLER OR CHIEF FINANCIAL
OFFICER TO MEET THE SHORT OR INTERMEDIATE-TERM LIQUIDITY NEEDS OF THE
SPONSOR.
3. THE PUBLIC BANK MAY ACCEPT DEPOSITS, BUT SHALL BE EXEMPT FROM THE
REQUIREMENTS OF SECTION TEN OF THE GENERAL MUNICIPAL LAW.
4. THE PUBLIC BANK MAY ACCEPT DEPOSITS FROM ANY SOURCE AND FUNDS FROM
ANY SOURCE, INCLUDING FEDERAL FUNDS.
§ 156-G. PERMITTED ACTIVITIES OF THE PUBLIC BANK. 1. THE PUBLIC BANK
SHALL HAVE ALL THE RIGHTS AND POWERS CONFERRED BY ARTICLES THREE AND
FIFTEEN OF THIS CHAPTER, WHICH SHALL BE EXERCISED IN A MANNER CONSISTENT
WITH ITS MISSION. THE PUBLIC BANK MAY LIMIT AND DEFINE ITS RIGHTS AND
POWERS IN THE CHARTER THAT IT SUBMITS PURSUANT TO SECTION ONE HUNDRED
FIFTY-SIX-C OF THIS ARTICLE, BUT IT IS THE INTENTION TO GRANT ANY PUBLIC
BANK CREATED UNDER THIS LAW THE FULL RIGHTS AND POWERS THAT ANY BANK
WOULD BE PERMITTED TO EXERCISE UNDER NEW YORK'S BANKING LAWS, SUBJECT TO
THOSE LIMITATIONS THAT WILL BE APPROVED BY THE DEPARTMENT.
2. WITHIN THE OVERALL UNDERWRITING AND FINANCIAL POLICIES OF THE
PUBLIC BANK, THE PUBLIC BANK SHALL MAXIMIZE AND PRIORITIZE LOANS
SUPPORTING WORKER COOPERATIVES, COMMUNITY LAND TRUSTS, LOW-INCOME AND
AFFORDABLE HOUSING, RENEWABLE ENERGY, INFRASTRUCTURE DEVELOPMENT, SMALL
BUSINESSES, SMALL FARMS, MINORITY- AND WOMEN-OWNED BUSINESS ENTERPRISES,
STUDENTS IN NEED OF LOW-COST EDUCATION FINANCING OR REFINANCING STUDENT
LOAN DEBTS, AND OTHER INITIATIVES THAT FULFILL THE PUBLIC BANK'S
MISSION, WITH A FOCUS ON SERVING UNDERSERVED AND UNDERBANKED COMMUNI-
TIES, AS WELL AS THOSE WITHIN ECONOMICALLY DISTRESSED COMMUNITIES.
§ 156-H. INCONSISTENCY WITH OTHER LAWS. 1. A PUBLIC BANK SHALL COMPLY
WITH ALL REQUIREMENTS OF THIS CHAPTER, THE FINANCIAL SERVICES LAW, THE
STATE FINANCE LAW, THE LOCAL FINANCE LAW, THE GENERAL MUNICIPAL LAW, THE
NOT-FOR-PROFIT CORPORATION LAW, AND ALL OTHER RELEVANT PROVISIONS OF
STATE OR LOCAL LAW, EXCEPT TO THE EXTENT THAT A REQUIREMENT OF ANY OF
THOSE LAWS IS INCONSISTENT WITH A PROVISION OF THIS ARTICLE, IN WHICH
CASE THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL.
2. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, A COUNTY OR
OTHER STATE OR LOCAL AUTHORITY MAY LEND ITS CREDIT TO ANY PUBLIC BANK.
3. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, ANY STATE OR
LOCAL AUTHORITY MAY INVEST IN COMMERCIAL PAPER, DEBT SECURITIES OR OTHER
OBLIGATIONS OF A PUBLIC BANK.
4. NOTWITHSTANDING ANY PROVISION OF STATE OR LOCAL LAW, A PUBLIC BANK
SHALL BE ELIGIBLE TO RECEIVE STATE AND LOCAL AUTHORITY MONEY.
§ 156-I. OWNERS NOT TO BE CONSIDERED BANK HOLDING COMPANIES. FOR THE
PURPOSES OF SECTION ONE HUNDRED FORTY-ONE OF THIS CHAPTER, ANY SPONSOR,
PERSON OR ENTITY, INCLUDING A STATE OR LOCAL AUTHORITY, THAT OWNS,
CONTROLS, OR HOLDS AN OWNERSHIP INTEREST IN A PUBLIC BANK IS NOT A BANK
HOLDING COMPANY BY REASON OF THAT OWNERSHIP INTEREST.
S. 1992 9
§ 5. Section 98 of the state finance law is amended by adding a new
subdivision 7-a to read as follows:
7-A. COMMERCIAL PAPER, DEBT SECURITIES, BONDS, NOTES, OR OTHER OBLI-
GATIONS OF A PUBLIC BANK, AS DEFINED IN ARTICLE THREE-C OF THE BANKING
LAW.
§ 6. Paragraph d of subdivision 1 of section 10 of the general munici-
pal law, as amended by chapter 623 of the laws of 1998, is amended to
read as follows:
d. "Bank" shall mean a bank OR PUBLIC BANK as defined by the banking
law or a national banking association located and authorized to do busi-
ness in New York.
§ 7. This act shall take effect immediately.
