Summary Of IBANYS Government Relations Call On May 12, 2017:


May 12, 2017

IBANYS' Government Relations Committee met by conference call this morning. We heard a federal update from Alan Keller of ICBA, and a state update from IBANYS legislative counsel Bill crowell. 

State Update
IBANYS Legislative Counsel Bill Crowell discussed an issue of growing significance: the legislation (A.6946, Zebrowski/S.5308, Hamilton). The legislation was introduced by the two legislative Banks Committee Chairs, Sen. Jesse Hamilton (IDC-Brooklyn) and Assemblyman Ken Zebrowski (D-Rockland County).  It would extend the State's Banking Development Districts (BDD) Program to credit unions. The legislation is a Department of Financial Services bill.  IBANYS has prepared a Memo in Opposition to the legislation:  Click Here to read the memo.

As you know, the State BDD program currently provides participating banks that establish brick and mortar branches in underserved areas with real property tax benefits and state funds. Tax-exempt credit unions have for years been seeking entry into the business of municipal deposits in three areas: The BDD, the State Community Bank Deposits Program, and the general broad permission to enter the business across the board. 

However, this year is different for several reasons2017 marks the first time in history that DFS and, by extension, the Governor are supporting this idea and legislation . That is a significant change from previous years.  The idea also may have support from the State Senate's Independent Democratic Conference (IDC) , of which Senate Banks Chairman Hamilton is a member. That is politically significant: the IDC is an essential governing partner of the Senate Republicans, who hold a threadbare majority in the Senate.  Another major concern is the growing presence of credit unions in the political action process. Their latest filing shows they have more than $400,000 available in their PAC. 

As we have noted in the past, community banks provide a disproportionately high percentage of small business and agricultural loans in New York State vis-a-vis the amount of deposits they hold. The loss of municipal deposits would have a negative impact on business and balance sheets. At a number of banks, municipal deposits represent between 15% to 20% of their deposit base.  IBANYS is considering a number of options on this issue. 

WE NEED YOUR INPUT:  What percentage of your total deposits are municipal deposits?

Federal Update

ICBA's Alan Keller updated the Committee on recent developments on federal maters. He noted the success of the ICBA Capital Summit earlier this month. (IBANYS brought a delegation of more than 20 New York community bankers to the hill for meetings with Senator Schumer, Senator Gillibrand's senior financial services staff and members of the new York Congressional Delegation, including several members of the House Financial Services, Ways & Means, Agricultural and Workforce Committees.

Alan then updated the Committee on the status of key regulatory relief legislation and other matters.  He noted the House Financial Services Committee had reported the Financial CHOICE Act out of Committee, and the House would likely vote on it and pass it in the coming weeks. (However, it will likely not include the provision repealing the Durbin Amendment because it is viewed by the Speaker as too divisive.) Alan noted that there are now two versions of the CLEAR Regulatory Relief Act (the more targeted approach for community bank relief, without a number of broader and more controversial provisions in the CHOICE Act that would cause the Senate to balk at passing it).  The House has a version of CLEAR with 13 provisions and the Senate's has five provisions.

Alan reported that ICBA has prepared a Regulatory Relief White Paper for the Treasury Department as they prepare their report to the President. 

On the issue of flood insurance, Alan noted the House has a draft bill, and ICBA is in the process of reviewing it. (The current Act expires September 30, but could always be extended.)

In general, Alan noted there is a high degree of partisanship in Washington, ramped up by the recent removal of FBI Director Comey. The Senate Democrats have threatened to slow down or shut down activities in response, but ICBA does not view that as likely. However, the Senate will be preoccupied on the major issues of health care reform and tax reform and other issues will be in line after those are addressed.


Stephen W. Rice
Director of Government Relations & Communications
Independent Bankers Association of New York State