A Summary of 2014 Legislative Session
Public Affairs Update | By Stephen W. Rice
The New York State Legislature adjourned its 2014 session on Friday, June 20. For New York community banks, the session was highlighted by major tax reforms that will generate significant bottom-line savings.
That landmark victory concluded a process begun at Independent Bankers Association of New York State last fall, when our Government Relations Committee, officers and board of directors authorized our legislative representatives and special tax consultant to develop and advocate for proposals in response to recommendations by the Governor’s Tax Reform Task Force. As originally presented, major new tax burdens would have been imposed on community banks, including the elimination of real estate investment trusts. After numerous meetings with the Legislature and Executive Department, including the State Tax Department and Division of Budget, IBANYS’ proposals were adopted and incorporated into the sweeping 2014-15 state tax reforms.
The session also included numerous other bills supported, opposed or closely monitored by IBANYS on behalf of community banks. These included the extension of the state’s “wild card law” (supported by IBANYS and approved). It could prove even more important in the future if Congress moves ahead and approves new regulatory reforms for community banks contained in ICBA’s CLEAR ACT and Plan for Prosperity – strongly supported by IBANYS.
There were a number of foreclosure-related bills, including one requiring banks to maintain abandoned properties, and another mandating the appointment of receivers (opposed by IBANYS and tabled). One bill that did pass (A.9354 Weinstein/S.7119 Klein) extends for five years legislation enacted in 2009 that provides for a settlement conference and pre-foreclosure notice in mortgage foreclosure actions.
Whistleblower legislation that would have expanded protections of bank employees against retribution for reporting alleged violations by their employers was tabled. Meanwhile, legislation to lower the sub-prime threshold rate on FHA loans was approved.
A number of bills that were considered involved banks’ responsibilities regarding possible financial exploitation of vulnerable elderly bank customers. All were tabled, but many are likely to return in the future.
The Legislature also passed S2933 Farley/A977A Fahy, to allow requirements relating to the preservation of certain banking records to also be satisfied through electronic storage.
The 2014 session also included a major push by the state’s credit unions, who aggressively fought for a number of initiatives. There was some sense that the Legislature, having provided significant benefits and relief to community banks over the past two legislative sessions, might well turn to legislation to help credit unions.
IBANYS actively opposed and successfully helped to defeat credit union initiatives that would have:
Allowed credit unions to accept municipal deposits.
Given credit unions entree into the State Business Development Districts program and realize tax deductions.
Created a new state Credit Union Deposit Program (modeled after our Community Bank Deposit Program) that would have allowed them to accept state funds.
The Legislature did pass two bills involving state credit unions in the closing days and hours of the session, over IBANYS’ opposition. Both also passed in 2013, but were subsequently vetoed by the governor, at the urging of IBANYS.
A.9408 Robinson/S.7112 Griffo (sponsored by the chairs of the Senate and Assembly Banks Committees) would expand state credit unions’ qualifications for membership and enhance their investment powers.
The second bill, A.9037A/S.6805B Lanza, would allow credit unions to conduct savings promotion prize giveaways, linked to savings accounts. Both bills were amended in an effort to overcome the opposition expressed by IBANYS and in last year’s veto messages.
IBANYS will once again work with the NYS Department of Financial Services and the Governor’s Office in an attempt to demonstrate why these bills should again be vetoed.
While it provided some major accomplishments, the 2014 legislative session was also filled with challenges, and there is no reason to expect that future sessions will be any different. Credit unions are perhaps more aggressive than ever, and their political action efforts are now extremely well funded.
In announcing the State Department of Financial Services’ “Community Bank Study” last year, Gov. Andrew Cuomo noted community banks represent a strong economic engine that drives growth in New York, and described their performance as remarkable.
IBANYS will continue to represent your interests, and demonstrate your importance, to the state and local economies, to the social fabric of our communities throughout New York and to New York’s future success. ■
Steve Rice coordinates government relations and communications for the Independent Bankers Association of New York State. He has worked in the New York banking industry and New York state government for more than three decades.