Bill Text: NY S00717 | 2009-2010 | General Assembly | Introduced
Bill Title: Establishes the credit union municipal deposit program.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2010-01-06 - REFERRED TO LOCAL GOVERNMENT [S00717 Detail]
Download: New_York-2009-S00717-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
717
2009-2010 Regular Sessions
I N S E N A T E
January 14, 2009
___________
Introduced by Sen. C. JOHNSON -- 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 state finance 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 one million dollars
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Paragraph c of subdivision 1 of section 10 of the general
2 municipal law, as amended by chapter 623 of the laws of 1998, is amended
3 to read as follows:
4 c. "Public deposits" shall mean deposits of public funds in a bank,
5 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, or trust
6 company which are available for all uses generally permitted by the
7 bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, or trust
8 company to the depositing local government for actually and finally
9 collected funds under the bank's, SAVINGS BANK'S, SAVINGS AND LOAN ASSO-
10 CIATION'S, CREDIT UNION'S, or trust company's account agreement or poli-
11 cies.
12 S 2. Paragraphs f, g and h of subdivision 1 of section 10 of the
13 general municipal law are relettered paragraphs g, h and i and three new
14 paragraphs f, j and k are added to read as follows:
15 F. "CREDIT UNION" SHALL MEAN A STATE-CHARTERED CREDIT UNION AS DEFINED
16 BY SUBDIVISION NINE OF SECTION TWO OF THE BANKING LAW OR A
17 FEDERALLY-CHARTERED CREDIT UNION AS DEFINED BY THE FEDERAL CREDIT UNION
18 ACT, LOCATED AND AUTHORIZED TO DO BUSINESS IN NEW YORK.
19 J. "SAVINGS BANK" SHALL MEAN A SAVINGS BANK AS DEFINED BY SUBDIVISION
20 FOUR OF SECTION TWO OF THE BANKING LAW OR ANY FEDERAL SAVINGS BANK.
21 K. "SAVINGS AND LOAN ASSOCIATION" SHALL MEAN A SAVINGS AND LOAN ASSO-
22 CIATION AS DEFINED BY SUBDIVISION EIGHT OF SECTION TWO OF THE BANKING
23 LAW OR ANY FEDERAL SAVINGS AND LOAN ASSOCIATION.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05647-01-9
S. 717 2
1 S 3. Subdivisions 2, 3 and 4 of section 10 of the general municipal
2 law, as amended by chapter 623 of the laws of 1998, paragraphs a and b
3 of subdivision 3 as amended by chapter 545 of the laws of 2005, and
4 paragraph c of subdivision 3 as amended by chapter 615 of the laws of
5 2002, are amended to read as follows:
6 2. a. The governing board of every local government shall designate
7 one or more banks, SAVINGS BANKS, SAVINGS AND LOAN ASSOCIATIONS, CREDIT
8 UNIONS or trust companies for the deposit of public funds, the disposi-
9 tion of which is not otherwise provided for by law, received by the
10 chief fiscal officer or any other officer authorized by law to make
11 deposits. Such designation shall be by resolution of the governing
12 board or, in the case of a city, such other body as may be authorized or
13 required by law to designate depositaries. Such resolution shall speci-
14 fy the maximum amount which may be kept on deposit at any time in each
15 such bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or
16 trust company. Such designations and amounts may be changed at any time
17 by further resolution.
18 THE GOVERNING BOARD OF EVERY LOCAL GOVERNMENT SHALL FORWARD A COPY OF
19 SUCH RESOLUTION TO THE OFFICE OF THE STATE COMPTROLLER WHO SHALL RETAIN
20 SUCH COPY UNTIL SUCH RESOLUTION IS AMENDED OR DISSOLVED. A COPY OF SUCH
21 RESOLUTION SHALL BE RETAINED BY THE STATE COMPTROLLER FOR RECORD KEEPING
22 PURPOSES ONLY.
23 b. Except as otherwise provided by law, all deposits shall be made to
24 the credit of the local government. The deposit of public funds pursu-
25 ant to this subdivision shall release the officer making the deposit and
26 his or her surety from any liability for loss of such public funds by
27 reason of the default or insolvency of any such bank, SAVINGS BANK,
28 SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company.
29 c. The governing board of a local government, in which a banking
30 development district has been designated by the superintendent of banks
31 pursuant to section ninety-six-d of the banking law, may designate a
32 bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, trust
33 company or national bank located in such district for the deposit of
34 public funds, the disposition of which is not otherwise provided for by
35 law, received by the chief fiscal officer or other officer authorized by
36 law to make such deposits. Such designation shall be by resolution of
37 the governing board or, in the case of a city, such other body as may be
38 authorized or required by law to designate depositories. Such resol-
39 ution shall specify the maximum amount which may be kept on deposit at
40 any time with such bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION,
41 CREDIT UNION, trust company or national bank located in such district.
42 THE GOVERNING BOARD OF EVERY LOCAL GOVERNMENT SHALL FORWARD A COPY OF
43 SUCH RESOLUTION TO THE OFFICE OF THE STATE COMPTROLLER WHO SHALL RETAIN
44 SUCH COPY UNTIL SUCH RESOLUTION IS AMENDED OR DISSOLVED. A COPY OF SUCH
45 RESOLUTION SHALL BE RETAINED BY THE STATE COMPTROLLER FOR RECORD KEEPING
46 PURPOSES ONLY. Subject to an agreement between such governing board and
47 such banking institution, public funds deposited in such banking insti-
48 tution may earn a fixed interest rate which is at or below such banking
49 institution's posted two year certificate of deposit rate. In those
50 instances where there is such an agreement, its terms and conditions
51 shall also be specified in the resolution. Any such designation,
52 amount, or agreement provisions may be changed at any time by further
53 resolution.
54 3. All public deposits in excess of the amount insured under the
55 provisions of the Federal Deposit Insurance Act OR BY THE NATIONAL CRED-
S. 717 3
1 IT UNION ADMINISTRATION UNDER THE FEDERAL CREDIT UNION ACT as now or
2 hereafter amended shall be secured in accordance with this subdivision:
3 a. The officers making a deposit may accept a pledge of eligible secu-
4 rities having in the aggregate a market value at least equal to the
5 aggregate amount of public deposits from such officers, or a pledge of a
6 pro rata portion of a pool of eligible securities having in the aggre-
7 gate a market value at least equal to the aggregate amount of public
8 deposits from all such officers within the state at such bank, SAVINGS
9 BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company,
10 together with a security agreement from the bank, SAVINGS BANK, SAVINGS
11 AND LOAN ASSOCIATION, CREDIT UNION or trust company. The security agree-
12 ment and custodial agreement referred to below may be the same agreement
13 including when the bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION,
14 CREDIT UNION or trust company holding the public deposits holds the
15 collateral for the public body. The security agreement shall provide
16 that such eligible securities or pro rata portion of a pool of eligible
17 securities are being pledged by the bank or trust company as security
18 for the public deposits, together with agreed upon interest, if any, and
19 any costs or expenses arising out of the collection of such deposit upon
20 a default. It shall also provide for the conditions under which the
21 securities or pro rata portion of a pool of eligible securities held may
22 be sold, presented for payment, substituted or released and the events
23 of default which will enable the local government to exercise its rights
24 against the pledged securities. Such agreement shall include all
25 provisions deemed necessary and sufficient to secure in a satisfactory
26 manner the local government's interest in the collateral. The custodial
27 agreement shall provide that the pledged securities or pro rata portion
28 of a pool of eligible securities will be held by the custodial bank,
29 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
30 ny as agent of, and custodian for, the local government, and will be
31 kept separate and apart from the general assets of the custodial bank,
32 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
33 ny and it shall also provide for the manner in which the custodial bank,
34 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
35 ny shall confirm the receipt, substitution or release of the collateral.
36 Such agreement shall provide for the frequency of revaluation of collat-
37 eral by the custodial bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION,
38 CREDIT UNION or trust company and the substitution of collateral when a
39 change in the rating of a security causes ineligibility pursuant to
40 paragraph [f] G of subdivision one of this section. Such agreement shall
41 include all provisions deemed necessary and sufficient to secure in a
42 satisfactory manner the local government's interest in the collateral.
43 Such agreement may also contain such other provisions as the governing
44 board may deem necessary.
45 b. Whenever eligible securities delivered to a custodial bank, SAVINGS
46 BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company pursu-
47 ant to this paragraph are transferred by entries on the books of a
48 federal reserve bank or other book-entry system operated by a federally
49 regulated entity without physical delivery of the evidence of such obli-
50 gations, the records of the custodial bank, SAVINGS BANK, SAVINGS AND
51 LOAN ASSOCIATION, CREDIT UNION or trust company shall show, at all
52 times, the interest of the local government in such securities or pro
53 rata portion of a pool of eligible securities as set forth in the secu-
54 rity agreement.
55 c. (i) In lieu of or in addition to the deposit of eligible securi-
56 ties, the officers making a deposit may accept an eligible surety bond
S. 717 4
1 payable to such local government as security for the payment of one
2 hundred percent, or an eligible letter of credit payable to such local
3 government as security for the payment of one hundred forty percent, of
4 the aggregate amount of public deposits from such officers and the
5 agreed upon interest, if any. The terms and conditions of any eligible
6 surety bond shall be approved by the governing board.
7 (ii) In lieu of or in addition to the deposit of eligible securities,
8 the officers making a deposit may, in the case of an irrevocable letter
9 of credit issued in favor of the local government by a federal home loan
10 bank whose commercial paper and other unsecured short-term debt obli-
11 gations are rated in the highest rating category by at least one
12 nationally recognized statistical rating organization, accept such
13 letter of credit payable to such local government as security for the
14 payment of one hundred percent of the aggregate amount of public depos-
15 its from such officers and the agreed upon interest, if any.
16 d. For purposes of determining the market value of securities as
17 required by this subdivision:
18 (i) The eligible securities described in subparagraphs (viii), (x) and
19 (xi) of paragraph [f] G of subdivision one of this section shall be
20 valued at eighty percent of their market value.
21 (ii) The eligible securities described in subparagraph (ix) of para-
22 graph [f] G of subdivision one of this section shall be valued at seven-
23 ty percent of their market value.
24 (iii) Of the eligible securities described in subparagraphs (v), (vi)
25 and (vii) of paragraph [f] G of subdivision one of this section, those
26 securities rated in the highest category shall be valued at one hundred
27 percent of their market value; those securities rated in the second
28 highest rating category shall be valued at ninety percent of their
29 market value; and those securities rated in the third highest rating
30 category shall be valued at eighty percent of their market value. When
31 two nationally recognized statistical rating organizations rate a secu-
32 rity in two different categories, the security shall be considered to be
33 rated in the higher of the two categories.
34 4. (a) Notwithstanding any other provision of law to the contrary, the
35 chief fiscal officer, or other officer authorized by law to make depos-
36 its, may, subject to the approval of the governing body of a local
37 government, by resolution, enter into a contract with a courier service
38 for the purpose of causing the deposit of public funds with a bank,
39 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust compa-
40 ny as provided in this section.
41 (b) The entrusting of public funds for deposit pursuant to paragraph
42 (a) of this subdivision shall release the officer entrusting the public
43 funds to the courier service and his or her surety from any liability
44 for loss of such public funds by the courier service in the process of
45 delivering such public funds to the designated bank, SAVINGS BANK,
46 SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company.
47 (c) The local government authorizing the deposit of public funds by a
48 courier service pursuant to paragraph (a) of this subdivision shall
49 require the courier service to obtain a surety bond for the full amount
50 entrusted to the courier, payable to the local government and executed
51 by an insurance company authorized to do business in this state, the
52 claims paying ability of which is rated in the highest rating category
53 by at least two nationally recognized statistical rating organizations,
54 to insure against any loss of public funds entrusted to the courier
55 service for deposit or failure to deposit the full amount entrusted to
56 the courier.
S. 717 5
1 (d) A deposit made by a courier on behalf of a local government shall
2 be deemed to be a deposit made by the chief fiscal officer or other
3 officer entrusting such funds for purposes of the requirements contained
4 in this section for securing public deposits.
5 (e) A bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION
6 or trust company may, from time to time and as agreed upon with a local
7 government, reimburse all or part of, but not more than, the actual cost
8 incurred by the local government in transporting cash, negotiable
9 instruments or other items for deposit through a courier service. Any
10 such reimbursement agreement shall apply only to a specified deposit
11 transaction, and may be subject to such terms, conditions and limita-
12 tions as the bank, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT
13 UNION or trust company deems necessary to ensure sound banking prac-
14 tices, including, but not limited to, any terms, conditions or limita-
15 tions that may be required by the banking department or other federal or
16 state authority.
17 S 4. Subdivision 2 of section 11 of the general municipal law, as
18 amended by chapter 708 of the laws of 1992, is amended to read as
19 follows:
20 2. The governing board of any local government or, if the governing
21 board so delegates, the chief fiscal officer or other officer having
22 custody of the moneys may temporarily invest moneys not required for
23 immediate expenditure, except moneys the investment of which is other-
24 wise provided for by law, in special time INTEREST-BEARING deposit
25 accounts in, or certificates of deposit issued by, a bank, SAVINGS BANK,
26 SAVINGS AND LOAN ASSOCIATION, CREDIT UNION or trust company located and
27 authorized to do business in this state, provided however, that such
28 time deposit account or certificate of deposit shall be payable within
29 such time as the proceeds shall be needed to meet expenditures for which
30 such moneys were obtained and provided further that such time deposit
31 account or certificate of deposit be secured in the same manner as is
32 provided for securing deposits of public funds by subdivision three of
33 section ten of this article.
34 S 5. Subdivision 1 and the opening paragraph of subdivision 2 of
35 section 105 of the state finance law, subdivision 1 as amended by chap-
36 ter 204 of the laws of 2002 and the opening paragraph of subdivision 2
37 as amended by chapter 154 of the laws of 1953, are amended and a new
38 closing paragraph is added to such section to read as follows:
39 1. All moneys received by the commissioner of taxation and finance on
40 account of the state, excepting such moneys as are required by law to be
41 deposited to the credit of the comptroller, but including such moneys as
42 are thereafter paid into the state treasury by the comptroller, shall be
43 deposited by the commissioner of taxation and finance within three days
44 after the receipt thereof, either as a demand deposit or an interest-
45 bearing [time] deposit (other than a time certificate of deposit), as he
46 OR SHE and the comptroller may determine, in such banks, trust companies
47 [and industrial banks], SAVINGS BANKS, SAVINGS AND LOAN ASSOCIATIONS OR
48 CREDIT UNIONS as in his OR HER opinion and the opinion of the comp-
49 troller are secure. The moneys so deposited shall be placed to the
50 account of the commissioner of taxation and finance. He OR SHE shall
51 keep a bankbook in which shall be entered his OR HER account of deposit
52 in and moneys drawn from the banks [and], trust companies [and indus-
53 trial banks], SAVINGS BANKS, SAVINGS AND LOAN ASSOCIATIONS OR CREDIT
54 UNIONS in which deposits are made by him OR HER, which he OR SHE shall
55 exhibit to the comptroller for his OR HER inspection on the first Tues-
56 day of every month and oftener if required. He OR SHE shall not draw any
S. 717 6
1 moneys from such banks, trust companies [or industrial banks unless by
2 checks signed and countersigned], SAVINGS BANKS, SAVINGS AND LOAN ASSO-
3 CIATIONS OR CREDIT UNIONS DESIGNATED in the manner prescribed by section
4 one hundred one OF THIS ARTICLE, unless otherwise provided by law. No
5 moneys shall be paid by any such bank, trust company [or industrial
6 bank], SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION OR CREDIT UNION out of
7 any such deposit except upon such checks. Moneys may be paid through
8 electronic transfer in accordance with procedures developed by the
9 commissioner of taxation and finance and the comptroller and consistent
10 with the requirements of this section for recording payments. Such
11 payments through electronic transfer shall be considered, for purposes
12 of this chapter, to be moneys drawn by check. Every such bank, trust
13 company [or industrial bank], SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION
14 OR CREDIT UNION shall transmit to the comptroller monthly statements of
15 all moneys received and paid by it on account of the commissioner of
16 taxation and finance.
17 Every bank, trust company [and industrial bank], SAVINGS BANK, SAVINGS
18 AND LOAN ASSOCIATION OR CREDIT UNION designated for the deposit of state
19 moneys under the provisions of this section shall, before deposits are
20 made:
21 PUBLIC FUNDS DEPOSITED INTO A SAVINGS BANK, FEDERAL SAVINGS BANK,
22 CREDIT UNION, FEDERAL CREDIT UNION, SAVINGS AND LOAN ASSOCIATION OR
23 FEDERAL SAVINGS AND LOAN ASSOCIATION, SHALL BE LIMITED TO ONE MILLION
24 DOLLARS PER DEPOSITORY.
25 S 6. The opening, second and third undesignated paragraphs of section
26 106 of the state finance law, the second undesignated paragraph as
27 amended by chapter 293 of the laws of 1992, are amended and a new clos-
28 ing paragraph is added to such section to read as follows:
29 Such moneys received by the commissioner of taxation and finance as
30 are now deposited to the credit of the comptroller pursuant to statute,
31 and thereafter paid into the state treasury, shall be deposited by him
32 to the credit of the comptroller in such bank [or], trust company,
33 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION OR CREDIT UNION, as shall be
34 designated by the comptroller at such rate of interest, if any, as shall
35 be agreed upon by the depositary and the comptroller.
36 All other moneys received by the commissioner of taxation and finance
37 except as provided in section one hundred five of this article and all
38 moneys received by any other state officer or other person receiving
39 moneys belonging to the state, or for which such state officer or other
40 person may be responsible in his official capacity, and all moneys
41 received by any state institution, except for moneys received pursuant
42 to a clinical practice plan established pursuant to subdivision fourteen
43 of section two hundred six of the public health law and all moneys
44 received from the state by any charitable or benevolent institution
45 supported in whole or in part by the state, shall be deposited to his or
46 its credit in such bank [or], trust company, SAVINGS BANK, SAVINGS AND
47 LOAN ASSOCIATION OR CREDIT UNION, as shall be designated by the comp-
48 troller at such rate of interest, if any, as shall be agreed upon by the
49 depositary and the comptroller.
50 Every [bank or trust company] DEPOSITARY designated by the comptroller
51 for the deposit of any such moneys:
52 PUBLIC FUNDS DEPOSITED INTO A SAVINGS BANK, FEDERAL SAVINGS BANK,
53 CREDIT UNION, FEDERAL CREDIT UNION, SAVINGS AND LOAN ASSOCIATION OR
54 FEDERAL SAVINGS AND LOAN ASSOCIATION, SHALL BE LIMITED TO ONE MILLION
55 DOLLARS PER DEPOSITORY.
S. 717 7
1 S 7. Severability. If any clause, sentence, paragraph, section or part
2 of this act shall be adjudged by any court of competent jurisdiction to
3 be invalid, such judgment shall not affect, impair or invalidate such
4 clause, sentence, paragraph, section or part thereof directly involved
5 in the controversy in which such judgment shall have been rendered.
6 S 8. This act shall take effect immediately.
