Friday, November 9, 2018

  • IBANYS Member CEOs
  • Members Of IBANYS Government Relations Committee 
  • John Witkowski, IBANYS President & Chief Executive Officer 
  • Steve Rice, IBANYS Director of Government Relations & Communications
Summary of Post-Election Conference Call
IBANYS held a post-midterm-election conference call for members of the Government Relations Committee and member bank CEOs on Friday, November 9. The purpose was to review the results of the election and its potential impact in both Albany and Washington, D.C. Providing the briefing and update were IBANYS President & CEO John Witkowski, Director of Government Relations/Communications Steve Rice and Legislative Counsel Bill Crowell.

Executive Department/Administration
The victory by Governor Cuomo (and statewide Democratic candidates, for Lt. Governor, State Comptroller and Attorney General) means the Cuomo administration will begin a third term in January, 2019. There will be a new Attorney General (Letitia James), and she plans to keep Acting Attorney General Barbara Underwood on as Solicitor General (the position Underwood held before being named Acting Attorney General upon the resignation of Eric Schneiderman earlier this year.)  A number of state agency commissioners are already likely to move on, with new people replacing them. There are rumors that State Department of Financial Services Superintendent Maria Vullo may be considering her future plans as well.
State Legislature
The biggest change in Albany will be felt in the Legislature. Before the election, Republicans held a narrow one-seat majority that included the vote of Democrat Simcha Felder (D-Brooklyn) who voted with the GOP. After the election, the new Senate that convenes in January will have 40 Democrats (if, as expected, Sen. Felder rejoins the Democratic conference) and just 23 Republicans. A number of the new Democratic senators are viewed as from the more progressive wing of the Democratic Party. Clearly, the makeup and character of the state senate - long a "firewall" for banking and business interests against Assembly actions) will be very different.
  • Not only will the State Assembly continue to be heavily Democratic and downstate-influenced - now, the senate will be as well. From the eastern tip of Long Island, through New York City, Westchester, Rockland, Orange, Dutchess, Sullivan, Delaware, Putnam and Ulster Counties, there will now be 37 Democratic state senators and just five Republicans.
  • Problematically, of the 40 Democratic state senators in the new majority, there will only be 6 north of Westchester/Rockland Counties. . .and only 3 north and west of Albany, (areas traditionally considered "upstate" and where the bulk of IBANYS member banks are located.) In these counties and areas, only Senators Breslin (Albany) May (newly elected in Syracuse region) and Kennedy (Buffalo/Western New York) will be in the majority.
  • On Long Island, where before the election there had been 6 GOP senators and three Democrats, that has now been reversed. What had often in the past been a 9-0 Republican Long Island delegation is now two-thirds Democratic. Among the GOP senators who lost were longtime senator Kemp Hannon, Carl Marcellino and current Banks Chair Elaine Phillips.
  • There is no indication as yet who will chair the Senate Banks Committee. When the Independent Democratic Conference was still in effect, two IDC members had served in that position (Diane Savino and Jesse Hamilton both of Brooklyn). Hamilton lost his primary, and Savino, as a former IDC member, is not deemed likely to receive the chairmanship.
There were a number of contributing factors of the massive switch, including:
  • The anti-Trump sentiment evident throughout much of the state
  • The heavy and growing Democratic enrollment advantage
  • The fact that independent voters supported Democratic candidates this cycle
  • The addition of many new voters to the electorate, many of whom supported Democrats
  • Strong, nearly monolithic union support for Democrats
  • The abandonment of the GOP by several significant GOP donors, resulting in Democrats outspending their opponents in numerous districts and
  • The active and unprecedented support of Governor Cuomo for a Democratic takeover in the state senate.
Clearly, community banks will face a very different environment in Albany in 2019.
With the power base in the Senate and Assembly now based in New York City and downstate regions, most IBANYS members will be represented in both chambers by members of the minority. Inherently, our collective influence faces serious challenges.
There is a serious need for IBANYS members to reach out and schedule meetings with new members of the State Senate in particular, as well as the Assembly - preferably by inviting them to the bank, or to gatherings of multiple community banks in their district.
  • We need to educate and inform them of the role, importance and needs of community banks in their localities and with the local and state economies. IBANYS will prepare talking points for member banks to use in these meetings. IBANYS members should also use the Community Bank Study of several years ago by the State Department of Financial Services in which the Superintendent and Governor Cuomo, that noted the essential role we play in New York, and the importance of a strong community banking industry. We will also explore other similar studies (by Cornell University, the FDIC, etc.) that may be helpful.
  • IBANYS will also provide to member banks a listing of all newly elected State Senators, State Assembly Members and Members of Congress - showing the counties they all represent - for use in scheduling outreach meetings.
One important component will be working to motivate community banks in downstate areas - including non-IBANYS members - to also join in this outreach and education programs. IBANYS will pursue this avenue as well.

Gaining access to the municipal deposits business has long been a primary legislative objective for credit unions. For the past several years, IBANYS has managed to stop legislation that passed the Assembly which would have allowed credit unions to
  • participate in the State Business Development Program
  • participate in the Community Bank Deposit Program
  • gain blanket access to all municipal/public deposits. 
For several years, IBANYS has succeeded in stopping these efforts to enhance credit unions in the state senate after the bills were approved in the Assembly. Now, the likelihood is there will be considerable support for a credit union agenda in the new senate. Most members of the new Democratic majority represent downstate districts that have a much larger credit union presence than community bank presence. (In many cases, there is no community bank presence.) Credit unions have long been major supporters of Senate Democrats at election time, and have used a very well funded political action committee to demonstrate that support. Twenty-five states currently allow credit unions into the municipal deposits business. There will be strong support for New York joining the list in 2019.
IBANYS must formulate a new strategy on this issue.
  • For example, we need to demonstrate the impact that credit unions being in the business would have on community banks' solvency, bottom line and ability to continue to provide the lending/other activities in their communities. IBANYS needs input from member banks on the importance municipal deposits play in their balance sheets. 
  • There may eventually be an opportunity to mitigate how much of the muni/public deposits business that credit unions are allowed into (see the list of three options above). There could also be the possibility of requiring credit unions to form commercial bank entities in order to participate (as thrifts are required to do.)
On other issues, we need to be proactive in developing a legislative agenda that could benefit community banks. These might include looking at not only re-introducing bills we currently have, but also considering legislation regarding online lending regulation, medical marijuana and hemp, and others.


Nationally, Democrats gained 31 seats in the U.S. House (which may eventually grow to as many as 38 once undecided races are finalized) and gained the majority. Republicans retained control of the U.S. Senate, and likely added between one-to-three seats, again depending upon undecided races.
In the House, this means the Chair of the House Financial Services Committee will be Rep. Maxine Waters of California, a longtime member of the Committee and from the progressive wing of the party. Her focus will likely include consumer issues, housing finance and CRA. While she opposed S.2155 (the regulatory relief bill), her opposition was primarily regarding benefits for larger banks, not to providing relief to community banks. There have been three New York Democrats on the committee: Carolyn Maloney (Manhattan), who was also Ranker on the Capital Markets Subcommittee), Nydia Velazquez (Brooklyn) and Greg Meeks (Queens). Three Republicans were also on the committee: Peter King and Lee Zeldin (both from L.I.) and Claudia Tenney (Central New York), who lost re-election. It remains to be seen who will remain on the committee in 2019, and/or if other New Yorkers may be added.
Meanwhile, the Senate Banking Committee will likely be chaired by either current Chairman, Senator Mike Crapo (Idaho), or Pat Toomey (Pennsylvania).  With a divided Congress (Democratic House, Republican Senate), it is not likely any controversial legislation will be passed. 
Three Republican New York Representatives were defeated for re-election.
  • Dan Donovan of Staten Island (lost to Max Rose)
  • John Faso from the Hudson Valley (lost to Antonio Delgado)
  • Claudia Tenney from Central New York (lost to Anthony Brindisi)
This means that in the new Congress, the New York State delegation will have 21 Democrats and 6 Republicans.
Three New York Democrats are currently in line to chair significant House Committees unless changes occur.
  • Rep. Jerry Nadler (Manhattan) would chair Judiciary
  • Rep. Nita Lowey (Westchester) would chair Appropriations
  • Rep. Eliot Engel would chair Foreign Affairs
IBANYS will be updating you as the situations in Albany and Washington continue to evolve. We will be contacting you on the need for data regarding the importance of municipal deposits to your balance sheets. In addition, we will provide under separate cover: 1) talking points about community banking in New York State for your use in outreach meetings with newly elected state and federal legislators in your area, and 2) a list of the new members of the New York State Senate, New York State Assembly and New York Congressional Delegation. 

Thank you.

Stephen W. Rice
Director of Government Relations & Communications