Friday's News

April 12, 2019

State lawmakers are in recess for two weeks, but are expected to focus on issues with banking industry impact upon their return. In Washington this week, the CEOs of the largest banks sat for six hours of questioning before a House panel.

State Legislative Developments

• The State Legislature is on a two-week scheduled break, with session set to resume on April 29, 2019. For the remainder of session, the legislature is expected to focus on issues that were not included in the final state budget, including rent regulations, driver’s licenses for undocumented immigrants and the legalization of recreational cannabis.

• Among the bills that moved this week:

o   S.2245 (Sanders)/A.1940(Zebrowski), which would increase the number of withdrawal transactions allowed in basic banking accounts for account holders sixty-five years of age or older from eight to twelve transactions at no additional cost, moved through the Senate Banks Committee and was reported to the Senate floor.  This bill has not yet moved in the Assembly, where it is assigned to the Assembly Banks Committee. NYBA is monitoring this bill.

o   S.1864 (Gaughran)/A.4403 (McDonald), which reduces the tax redemption period for properties certified as vacant and abandoned from the local building department official from two years to one year, was reported from the Assembly Codes Committee.  This bill has already passed the Senate.

Federal Legislative Developments

• The CEOs of JPMorgan Chase, Bank of America, Citigroup, BNY Mellon, Morgan Stanley, Goldman Sachs, and State Street appeared before the House Financial Services Committee at a hearing entitled “Holding Megabanks Accountable.” The topics of questions from lawmakers included leveraged lending, Fed regulatory reform, dividends, share buybacks, financing of the firearms industry, CECL, and the absence of prison sentences for bankers after the 2008 crisis.
• Republican members of the U.S. Senate Banking Committee called on the federal regulators to use their S.2155-granted authority and set the community bank leverage ratio at 8%. Banks with an 8% leverage ratio are permitted to opt out of Basel III capital requirements. NYBA supports the 8% threshold.
• More than 100 trade associations, joined by national banking groups, are supporting H.R. 216, the Main Street Tax Certainty Act of 2019 – a bill that makes permanent the 20% deduction for Subchapter S pass-through entities that was included in the 2017 tax reform law. The House bill has a companion bill in the Senate.

Federal Regulatory Developments

• The Federal Reserve is considering changes to the “living will” framework for large banks, including changes to regulatory capital requirements for U.S. subsidiaries of foreign banks. The proposal contemplates the eight largest banks (Category 1) to file resolution plans every two years. The largest U.S. regionals and foreign banks (Categories 2 & 3) would file every three years, and the remaining 53 foreign banks (Category 4) would file less-complex plans on a 3-year cycle.

Local Developments

• The New York City Council passed a bill on Thursday which would prohibit most employers from performing drug tests for marijuana use on job applicants. The bill contains federal exemptions, and a provision that allows for testing if it is suspected that an employee is under the influence. The bill is awaiting the Mayor’s signature. A copy of the bill can be found here. 
•  In its response to the Mayor’s Budget proposal, the New York City Council called upon the Administration to study and issue a report on the creation of a public bank owned and operated by the City of New York. The Council noted that “a thorough study would include an evaluation of existing public banks and best practices, an evaluation of the City’s current relationships with private banks, and the legal and financial feasibility of establishing a New York City municipal bank, including the funds needed to capitalize the bank and methods for achieving that capitalization.”  The recommendations in the Council’s response go to the Mayor in the ongoing process of negotiating the fiscal year 2020 New York City budget. 

Questions?
Contact Mike Smith at (212) 297-1699 or msmith@nyba.com, or Clare Cusack at (212) 297-1664 or ccusack@nyba.com.
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