General Industry Letters
Mortgage Banking Letters
Amendment to New York’s Banking Law Article 2, Section 12-a
New Wild Card Authority Under New York State Banking Law
October 22 , 2007
To the President of the Institution Addressed:
Re: New Wild Card Authority Under New York State Banking Law
As part of the New York State Banking Department’s ("NYSBD") ongoing effort to enhance the value of the New York State bank charter, effective September 1, 2007, Section 12-a was added to the New York State Banking Law to enable the Banking Board to grant to New York chartered banking organizations, as well as to licensed foreign bank branches and agencies, powers possessed by a counterpart federally-chartered banking institution. This so-called wild card authorization includes any right, power, privilege, benefit, activity, loan, investment or transaction that a federally-chartered banking institution, directly or through a subsidiary or subsidiaries, may lawfully exercise or engage in or into which it may lawfully enter. (Previously, wildcard powers could be adopted only by regulation, a far more time consuming process than adoption by resolution of the Banking Board.)
There are two ways in which a proposal for a wildcard power may be initiated. The first is through an application to the Superintendent by one or more state-chartered banking institutions. The second is through a recommendation by the Superintendent in his or her sole discretion. In each case, the wildcard power must be subject to the same terms and conditions as applicable to the federally-chartered banking institution, and also may be subject to such terms and conditions as the Superintendent finds necessary and appropriate, as approved by the Banking Board.
With respect to applications initiated by banking institutions, before any state chartered or licensed banking institution may exercise a power permitted to a federally-chartered institution of the same type, the banking institution must first make an application to the Superintendent, individually or with one or more other state chartered banking institutions, specifying the federally-permitted power they intend to exercise and the basis on which they believe such power is a federally-permitted power. The Superintendent will post notice of the application in the Banking Department’s Weekly Bulletin.
After promptly reviewing the application, the Superintendent will determine whether to recommend that the Banking Board approve the application and any terms and conditions he or she may deem appropriate. Under the statute, the Banking Board cannot approve an application until at least 30 days after notice of the application was posted. The Superintendent’s determination whether to recommend approval of the application and any recommendation to the Banking Board are to be made within 45 days after the posting of the application. However, the Superintendent may notify the applicant or applicants that the review of the application will be extended for an additional period of time not exceeding 120 days after the posting of the application, and the deadline may be extended for an additional period of time with the written consent of the applicant or applicants.
If the Superintendent determines not to recommend approval of the application, the Superintendent will notify the applicant (or applicants) in writing that it (they) may not exercise the requested power. If the Superintendent recommends approval of the application, and the Banking Board approves it, the applicant(s) may exercise the federally-permitted power subject to such terms and conditions as the Banking Board may have approved.
In order to approve an application, the Banking Board must determine that the Superintendent’s recommendation is (i) consistent with the policy of the State of New York as declared in section 10 of the Banking Law, and (ii) necessary to achieve or maintain parity between state chartered banking institutions and their counterpart federally-chartered banking institutions.
The Banking Board, upon the recommendation of the Superintendent, may make the approval applicable to one or more additional state chartered banking institutions of the same type.
This letter should serve only as general information about new Section 12-a of the Banking Law. For a copy of the new provision, please visit the following web address:
If you have any questions about the application procedure, please contact David S. Fredsall, Deputy Superintendent of Banks, Foreign and Wholesale Banks Division, at (212) 709-1551 or Robert A. Mengani, Deputy Superintendent of Banks, Community and Regional Banks Division, at (212) 709-1610. If you have any other questions about the new law or would like to discuss a particular federally-permitted power, please contact Marjorie E. Gross, Deputy Superintendent and Counsel, at (212) 709-1640. We would welcome the opportunity to meet with you to discuss your questions.
Very truly yours,
Richard H. Neiman
Superintendent of Banks