Public Affairs

Governor Cuomo’s State Of The State Address Launches 2020 New York State Legislature

Several Proposals Have Direct Impact on Community Banks

Stephen W. Rice

March 4, 2020

Governor Andrew Cuomo delivers his State of the State address

In Albany, Governor Andrew Cuomo delivered his 10th annual State of the State address on Wednesday, January 8, officially kicking off the 2020 session of the New York State Legislature. The governor included several proposals that would have a direct impact on New York community banks.

The message included a proposal for "expanding access to safe and affordable financial services." The governor urged creating an "Excelsior Banking Network" to "increase access to safe, affordable bank accounts and small-dollar loans in underserved low-income communities."

He also proposed establishing a statewide Office of Financial Inclusion and Empowerment "to meet the financial services needs of low-and middle-income New Yorkers." His address further included proposals regarding strengthening consumer protection laws, elder financial fraud, and the licensing and monitoring of debt collectors.

In the first months of the session, the legislature will be considering how to address a state budget deficit of more than $6 billion. There has been talk among some lawmakers of an effort to raise revenue by, among other measures, revisiting bank taxes and/or imposing some version of a wealth tax on high earners.

 

Credit Unions Encroach

IBANYS' Government Relations Committee has discussed the upcoming session and focused on our strategy for the coming year. We reviewed a number of proposals related to community banks. We have met with the Governor's office and State DFS to address our priorities and concerns,

Specifically, we expressed our concerns on credit unions seeking to enter the overall municipal deposits business – an effort we were able to stop once again last year. With the current budget deficit, allowing tax-exempt credit unions into the bidding process would present a potential loss in state revenue of at least $18 million. For community banks, it would also pose a safety and soundness issue for those that lose their muni revenue and could curtail their ability to lend. 

We plan to pursue a number of "pro-active" bills, related to state CRA exemptions, enhancing the State Community Bank Deposit Program and establishing community bank service corporations. Clearly, community banks have our work cut out for us. We need your input and participation.

 

New Banks Committee Chair

There is a new chairman of the State Assembly Banks Committee: Speaker Carl Heastie (D-Bronx) has appointed Thomas Abinanti (D-Westchester County). Chairman Abinanti was elected to the Assembly in 2010 after serving in the Westchester County Legislature. He has previously chaired the Assembly Committee on Oversight, Analysis and Investigation, and has served on the Committees on Codes, Judiciary, Environmental Conservation and Health.

IBANYS will meet with the chairman and his senior staff to discuss the New York community banking industry, our concerns, priorities and background.

 

Washington News

Meanwhile, in Washington, Congress is also back in session, community banks – through IBANYS’ partner on the federal level, the Independent Community Bankers of America (ICBA) announced a 2020 agenda that includes:

  • Modernize the Bank Secrecy Act
  • Establish a cannabis-banking safe harbor
  • Close the industrial loan company loophole and
  • "Wake Up" to credit union and Farm Credit System practices. 

The House Financial Services Committee Chair Maxine Waters (D-CA) released a schedule of January hearings, including sessions on the Community Reinvestment Act, Financial Accounting Standards Board oversight, interest rate caps, mobile payments. 

IBANYS strongly supports ICBA’s message to Congress that credit unions are using their tax exemption to buy community banks, pay undisclosed salaries to top executives, and name sporting venues after themselves. Drawn from ICBA's "Do They Know They're Tax-Exempt?" research paper, it notes credit unions with more than $1 billion in assets saw their share of the tax subsidy increase by 260 percent over the past two decades. ICBA is conducting an ongoing campaign urging policymakers and the public to "Wake Up" to the risky practices, costly tax subsidies, and irresponsibly lax oversight of the nation's credit unions.

 

Stephen W. Rice is director of government relations and communications for the Independent Bankers Association of New York State.

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