By Steve Rice, IBANYS Director of Government Relations 

IBANYS' Government Relations Committee met by conference call last Friday, May 11 for an update on key federal and state issues of interest to New York independent community bankers - and, to discuss other issues and concerns on the legislative and regulatory fronts.

On the federal scene, ICBA continues to closely monitor a number of bills, while focusing on three major priorities:

• Supporting a five-year extension of the FDIC transaction account guarantee (TAG) program;
• opposing the credit union industry's efforts (S.2231/H.R.1418) to expand into prohibited commercial lending by more than doubling the current cap established by Congress on member business loans (from 12.25% to 27.5% of assets);
• and, strongly supporting passage of the Communities First Act to provide greatly needed regulatory and tax relief to community banks, their customers and their communities.  

On the State scene, the Legislature is about to begin its final push toward its scheduled June 21 adjournment. Among the bills highlighted on IBANYS' agenda:

• A.7195 by Assemblyman Gary Finch (R-Auburn, 123rd AD) to prohibit municipalities from depositing public money in financial institutions that do not pay New York state taxes. This legislation, whichIBANYS strongly supports, was held for consideration by the Assembly Local Governments Committee. No Senate companion bill was introduced, and no action is anticipated for the remainder of this session.

• The Community Banks Deposit Program (S.4927 Griffo/A.8147 Magee), which IBANYS supports, would expand the overall funds available for the program from $250 million to $350 million, and increase the cap on the amount of funds an individual bank may have on deposit from the program from $10 million to $20 million. The Senate bill is currently on the Senate Calendar, but the Assembly version remains in the Assembly Banks Committee. There appears to be some sentiment in the Assembly that the amount of overall funds available does not need to be increased since the current limit of $250 million has not been approached.

• The CDARS legislation (S.5135 Martins/A.8971 Magnarelli), which IBANYS also supports, is on the Senate calendar on third reading, but the Assembly version remains in the Assembly Ways & Means Committee. The credit unions are seeking to amend this legislation to include them, subject to approval by the National Credit Union Administration.

• The Banking Development District legislation (A9296 Robinson/S6692 Griffo), which IBANYS opposes as currently drafted, would impose certain additional criteria regarding "affordable products and services" (including financial education) on banks seeking to qualify for renewal of their state deposits. This would significantly increase the required paperwork burden on participating banks. The legislation is on the Assembly calendar, but the Senate version remains in the Senate Banks Committee. IBANYS has attempted to offer less onerous alternative provisions.

• A1362 Jeffries/S4406 Robach would significantly expand the State's Community Reinvestment Act, requiring the assessment of the banks' record of meeting credit needs to include a separate discussion of each assessment factor which would be applicable to branches, rather than system-wide, is now in the Assembly Ways & Means Committee and the Senate Banks Committee. IBANYS is opposed to this legislation.

• A.8145-B, Jeffries/S. 4567-B, Griffo) would greatly expand membership opportunities in State-chartered credit unions to anyone in "a geographic area," and provide many of the same investment powers and incidental powers as possessed by federal credit unions. IBANYS is opposed to this legislation. The legislation is in the Senate Banks and Assembly Ways & Means Committees.

• S6817A Maziarz/A9990 Morrelle would allow a local government to sell tax liens to a third party in return for the third party lending the homeowner enough funds to satisfy the liens. The bill could be interpreted as an invitation to fraud, particularly against seniors, and could cut off the rights of other lienholders and would leave municipalities in worse shape than before. The bill is in Senate Finance and Assembly Insurance Committees.