NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3320
SPONSOR: Zebrowski TITLE OF BILL: An act to amend the banking law, in relation to the
banking development district program; to amend chapter 526 of the laws
of 1998, amending the banking law relating to participation in the bank-
ing development districts program, in relation to the effectiveness
thereof
PURPOSE OF THE BILL:
This bill would amend the Banking Law to expand access to banking
services in communities where there is a demonstrated need for addi-
tional products and services.
SUMMARY OF PROVISIONS:
Section 1 of the bill would limit the designation of a banking develop-
ment district to fourteen years, yet allow for additional extensions in
5 or 10 year increments.
Section 3 of the bill would amend Banking Law § 96-d(5) to allow federal
and state credit unions to participate in the banking development
district program.
Sections 2 and 4 of the bill would set forth the effective dates.
JUSTIFICATION:
Many communities in New York State lack consumer banking services. In
1997, the Banking Development District (BDD) program was enacted to
incentive banks to locate branches in communities designated as under-
served by the Department of Financial. Services. Such communities either
have no available financial service options, or only offer alternative
(and often problematic) financial service options like check cashers and
pawn shops.
Under the BDD program, banks that open branches in underserved communi-
ties are eligible to receive below market-rate deposits. Such deposits
lower the financial risk the branches may incur when opening in an
underserved community.
Currently, however, credit unions are currently ineligible to partic-
ipate in the BDD program. Because banks and other eligible financial
institutions have submitted a modest number of applications over the
past twenty years, the program should be expanded to include credit
unions to encourage additional banking services in underserved communi-
ties.
At the same time, it is also appropriate to restrict the unlimited dura-
tion of a BDD designation. Once a banking deficit in an underserved
community is corrected, the incentives provided under the BDD program
are no longer needed. A fourteen year designation limit (with unlimited
extensions as necessary) would make the BDD program more efficient and
allow for the allocation of resources to other communities.
LEGISLATIVE HISTORY:
A.6949-B of 2017-18
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
Immediately.
