State Deposit Bill on Senate Banks Agenda
Our banking lobbyist friends have been scurrying around Albany like a cat on a hot tin roof since around 4:00 yesterday afternoon, which is when the Senate Banks Committee added two key credit union bills to this morning’s agenda. S. 3616 by Senator Funke would authorize the Comptroller and the Commissioner of Taxation to deposit state funds in credit unions. A second bill, S. 5521-a by Senator Montgomery would authorize credit unions to participate in the Banking Development District program. This bill has been around longer than my teenaged daughter.
Both bills would help consumers while putting New York credit unions on a level playing field with their banking counterparts. For example, currently the Community Bank Deposit Program authorizes but does not require the Comptroller and the Commissioner of Taxation to place up to $250 million in state funds in community banks “in recognition of the economic benefits and stimulus which result from the placement of deposits in local banks” (N.Y. Banking Law § 85). The Funke bill would give the State the same authority for credit unions. A companion bill, A. 774 by Assemblyman Rodriguez has already been voted out of the Assembly Banks Committee.
By the way, when this bill was floating around last year, there was a fair amount of nonsense about it. This is not a municipal deposit bill. In addition, the bill doesn’t take money away from community banks which are still eligible to receive up to $250 million. The vast majority of state funds are currently held by approximately 11 large banks. The key is that money placed in a credit union is money which, by definition, will go to help local communities grow. In contrast, state funds deposited in a large national bank may go to funding a loan in Idaho. I have nothing against Idaho, I like watching the Boise State football team, but I just don’t know why my tax dollars should go to Idaho.
Banking Development Districts have been around since 1997. In return for banking institutions opening branches in financially underserved areas, banking institutions receive public funds for which they have to pay low-interest. If the goal of the program is to benefit poor communities, then allowing credit unions to participate in these districts makes perfect sense. There is no shortage of areas that could benefit from broader access to financial services. Unfortunately, since 1997, banks have exercised a monopoly over the program and its benefits. A companion bill to the Senate proposal, A 3521-b/ Robinson, has already made it to the Assembly Rules Committee.
Whom Do You Dislike the Least?
Well, the fat lady has sung. With her primary victories in California and New Jersey, Hilary Clinton will take on Donald Trump in what promises to be the most watched reality T.V. show in history with the survivor getting to live in the White House. I don’t know what it says about the American Electorate that it has chosen two finalists for the most important job in the world are among the most unpopular candidates ever chosen by either party, but it can’t be good.
House Republicans Unveil Banking Reform Proposal
Saying he wanted “economic growth for all and bank bailouts for none” House Financial Services Chairman Jeb Henserling unveiled an election year manifesto to scale back Dodd Frank and implement major banking reforms including providing a way for banks to opt out of Basel III’s risk-based weighting requirements provided they have adequate capital. Among the reforms most beneficial to credit unions would be a mechanism for institutions to appeal exam findings “without fear of bureaucratic retaliation;” an extended 18-month exam cycle for certain credit unions and the vesting of the powers currently held by the CFPB’s director into a commission.
Joint Statement on Interbank Cybersecurity Issued
The NCUA released a statement from the FFIEC this morning reminding banking institutions to “actively manage the risks associated with interbank messaging and wholesale payment networks.” The statement comes in the aftermath of high profile cyber thefts involving transfers between some of the nation’s largest banks and even the New York Fed involving the SWIFT network.