Banking Interpretations

NYSBL 96(7) 

February 2, 2005

Dear [ ]:

In response to your E-Mail of December 29, 2004 to Superintendent Taylor, I offer the following:

The question of whether New York chartered banking institutions are permitted to invest public funds (it appears from the text of your E-Mail that "public" means state and local government and that is what I am assuming) through CDARS ("Certificate of Deposit Account Registry Service") is one that should be addressed by the New York State Comptroller's Office. That Office interprets the applicable provisions of the State Finance Law and other New York laws that contain provisions concerning the deposit of public monies and adopts regulations thereunder. Section 96(7)(c) of the New York
Banking Law authorizes commercial banks and trust companies to "pledge assets or furnish other security, satisfactory to the depositor, for the repayment of moneys held in the name of any state ...or any political subdivision or instrumentality of [it]. "Securitization of public deposits is required by the State Finance Law and other applicable laws. The Banking Law does not address the matter of public funds being deposited pursuant to programs such as the CDARS, which advertise that public monies may be insured by the FDIC for large amounts (up to $10 million in the CDARS program) through a single banking relationship (as you are aware, the monies are held at many different participating banks to achieve this result). 4044.

The Office of the State Comptroller may be reached at (518) 474-4044.

Steven Barras
First Counsel