BILL NUMBER: S8357
SPONSOR: SANDERS
 
TITLE OF BILL:
An act to amend the state finance law, in relation to a deposit place-
ment program for the Banking Development District Program
 
PURPOSE:
The State Finance Law (SFL) requires financial institutions that partic-
ipate in the Banking Development District (BDD) Program to protect the
State's deposits by posting collateral. This proposal will provide
community banks and minority depository institutions (MDIs) with an
option to use reciprocal deposits to secure federal deposit insurance
for the value of the State's deposits as an alternative to collateral.
The SFL is amended to permit, at the discretion of the state comptroller
and the commissioner of taxation and finance, a bank, trust company, or
national bank as set forth in section 96-d of the banking law that is a
community bank or MDI the authority to use a deposit placement program
in lieu of security bonds, letters of credit, checks, or other security
as collateral. The use of a deposit placement program will enable
community banks and MDIs that participate in the BDD Program this new
option.
 
SUMMARY OF PROVISIONS:
Section 1 amends State Finance Law section 105 (2) to include the
phrase, "except as otherwise provided in this section".
Section 2 amends State Finance Law section 105 (3) to include the
phrase, "and except as otherwise provided in this section".
Section 3 amends the State Finance Law section 105 to add a new subdivi-
sion 7 to provide for a deposit placement program for the Banking Devel-
opment District Program.
Section 4 sets forth an effective date.
 
JUSTIFICATION:
The BDD Program is designed to increase banking opportunities in commu-
nities that are underserved and that do not have access to critical
banking services. It is anticipated that the use of a deposit placement
program will help community banks and MDIs to have greater lending
capacity. Accordingly, this legislation will encourage increased partic-
ipation in the BDD Program by smaller banks, trust companies, or
national banks as set forth in section 96-d of the banking law and
minority depository institutions, resulting in additional benefits to
the members of the local community they serve.
 
LEGISLATIVE HISTORY:
New Bill.
 
FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S8357: 105 state finance law, 105(2) state finance law, 105(3) state finance law