Governor Paterson Signs Bill Making Banking More Accessible to the Half Million Unbanked New Yorkers
Expands Program Designed to Make Traditional Banking Services Available to Under-banked and Un-banked Communities
May 1, 2009
Governor David A. Paterson has signed legislation that allows for the establishment of multiple bank branches in an existing Banking Development District (BDD). The bill, which was sponsored by Senator Kevin S. Parker and Assemblyman José R. Peralta, encourages more banks to provide services in communities with limited access to existing traditional banking facilities.
There are approximately ten million Americans deemed as “un-banked” across the United States, and approximately half a million of them are in New York. The expansion of bank branches in BDD areas will decrease the number of un-banked New Yorkers, and should lead to more affordable products for the consumers as more banks leads to increased competition.
“There are too many communities throughout our State where it is difficult for New Yorkers to easily access basic banking services,” said Governor Paterson. “This new law will go a long way towards correcting that deficiency by allowing banks to expand in underserved areas. We know all too well the critical role that banks play for individuals, families and businesses, especially in this economic climate. I want to extend my sincere thanks to Senator Parker and Assemblyman Peralta for their hard work on this important issue.”
Senator Parker said: “We are taking an important and strong step in providing banks with the ability to open additional branches in under-served communities. Local banks are symbols of economic hope in these difficult times and are critical engines for job creation, promoting community stability, and enhancing access to capital for small businesses and homeowners in New York’s urban neighborhoods. Senate Democrats are committed to improving economic opportunity and stability across New York. I am proud to join Governor Paterson, Assemblyman Peralta, and my legislative colleagues in leading the fight for this important fiscal and economic reform.”
Assemblyman Peralta said: “As the Chair of the Subcommittee on Banking in Underserved Communities, I am honored that the Governor signed this legislation into law because it is clear that during these tough economic times it's imperative that we protect underdeveloped banking areas and ensure that banks do not red line any particular area. This bill helps the consumer and helps the banks because they will receive monetary incentives to do business in these non-traditional areas."
Superintendent of Banks Richard H. Neiman said: “The signing of this bill could not have been timed better. It is happening just as we are doing a top to bottom review of the BDD program to see how well it is working and what can be done to improve it. It is also happening at a time when more people may be losing trust in banks and turning to non-traditional banking methods and expensive alternative financial providers. Establishing more banks that are willing to offer affordable products is needed now more than ever.”
BDD designated areas and BDD branches are approved by the New York State Banking Department after a thorough review of a bank's joint application with a local government and involve the participation of the banks, local communities and local officials. BDD branches are also supported through below-rate deposits from the State and in some cases, deposits from the participating local government.
The Banking Development District (BDD)
The BDD program was created by the New York State Legislature in 1998 to encourage the establishment of bank branches in areas with a demonstrated need for banking services. BDD bank branches can help provide the services necessary to stimulate local economies by enhancing access to capital for local businesses, promoting long-term economic development, fostering job creation and promoting community stabilization and revitalization. A bank branch in a BDD also helps to ensure that low-and-moderate income communities and other under-banked communities are provided with access to banking services.