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Adopted Regulations
Summary of Text and Changes to Part 6.6 of  the General Regulations of the Banking Board

September 26, 2001 


RE: Final Adoption of Amendment to Part 6 of the General Regulations of the Banking Board to Grant State Banks and Trust Companies Relief from the Requirement of Banking Law Section 7010 that Requires the Boards of Directors of such Institutions to Meet Ten Times Per Year.

On September 14, 2001, the Banking Board adopted as final the attached amendment, a new Part 6.6 to Part 6 of the General Regulations of the Banking Board. The amendment became effective upon its publication in the State Register on September 26, 2001.

Section 14-g(2) of the New York State Banking Law ("NYSBL"), also known as the "wild card," authorizes the Banking Board "to adopt such rules or regulations that are, in its discretion, appropriate to enable banks or trust companies to exercise any right, power, privilege or benefit, to engage in any activity, or to enter into any loan, investment or transaction which a national bank…may lawfully exercise…"

Section 7010 of the NYSBL requires that the "board of every bank and trust company…. shall…hold a regular monthly meeting at least ten times a year provided, however, that during any three consecutive calendar months the board shall meet at least twice. The executive committee shall meet at least once in each thirty day period during which the board does not meet." Neither the National Bank Act nor the regulations of the Office of the Comptroller of the Currency provide for any minimum requirements for the number of meetings of national banks’ board of directors or executive committees.

The current requirements of Section 7010 place State-chartered banks and trust companies at a competitive disadvantage in their ability to recruit qualified individuals to serve on the boards of directors who are willing to attend ten board meetings a year. In contrast, national banks are not subject to a legally mandated schedule of meetings. The conclusion that State-chartered banks and trust companies are competitively disadvantaged was based on a review of the available corporate governance literature, the opinions of practitioners in that field, and the results of a survey on in-state and out-of-state national bank competitors of State-chartered banks and broker-dealers. Thus, it was determined that State-chartered banks and trust companies were in need of relief from the requirements of Section 7010.

The adopted amendment will grant New York State-chartered banks and trust companies relief from Banking Law Section 7010. This relief would permit the boards of directors of State-chartered banks and trust companies that are well-capitalized, well-managed, and have been in existence for more than five years to meet a minimum of six times per year and would drop the requirement concerning executive committee meetings. Parity with national banks will be achieved to ensure State-chartered banks’ and trust companies’ continued ability to compete with national banks in obtaining qualified board members.

Two comments received for this amendment, including one from two New York State legislators, raised an issue in connection with the proposed amendment. It was noted that in addition to providing relief from the meeting requirements of Section 7010, it appeared that the amendment would need to address the reporting requirements set forth in Section 121 of the NYSBL. Section 121 provides that a specific report be submitted monthly at a meeting of the full board or an executive committee thereof.

While the monthly submission requirements of Section 121 would need to be harmonized in the instance of those banks that would qualify for a minimum of six meetings a year under the proposed revision of Part 6.6, the Banking Department would follow the suggestion made in the comment letter submitted jointly by the Chair of the Assembly Standing Committee on Banks, Aurelia Greene and Assembly Chair of the Administrative Regulations Review Commission, Brian M. McLaughlin. This suggestion was to continue the requirement contained in Section 121 that reports be prepared on monthly basis, but allow for submission of the report to the board or executive committee to be deferred until the next scheduled meeting. It should be noted that this matter would be further clarified upon the passage by the New York State Legislature of a bill, A9147, that has been put forward by Chairperson Aurelia Greene (an identical bill has been introduced in the Senate, S3790). This bill would replace the requirement in Section 121 that the report be submitted "at least once in each month….at a regular meeting of the board" with a requirement that such report be submitted at each regular meeting of the board or executive committee.  

Very truly yours,

Christine M. Tomczak, Esq.
Secretary to the Banking Board

Department of Financial Services


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