Relates to certain voidable transfers affecting a federal home loan bank

• Democratic10

◆ The sponsor's argument

Why Leroy Comrie says this is needed

Federal Home Loan Banks are government sponsored entities created by Congress during the Great Depression to provide liquidity and promote stability. Federal Home Loan Banks provide advances (i.e., secured loans) to insurance companies, commercial banks and credit unions. In addition, pursuant to federal law, a Federal Home Loan Bank must dedi- cate 10% of its net income to support low-income housing projects. The Federal Home Loan Bank is, on an annual basis, the biggest provider of private affordable housing funding in New York. New York-domiciled insurance companies, among other financial insti- tutions such as banks and credit unions are eligible to become members of the FHLB in order to reliably borrow on a fully secured basis at low-cost. New York law governing FHLB lending to insurance companies, however, differs from federal banking law governing FHLB (and Federal Reserve Bank) lending to depository institutions. This legislation will align New York Insurance Law with Federal law applicable to FDIC insured commercial banks and NCUA insured credit unions, by amending the Insur- ance Law to ensure that if a proceeding under Article 74 is commenced with respect to an insurer member of a Federal Home Loan Bank, the proceeding shall not operate as a stay, injunction, or prohibition of exercise by a FHLB of its rights regarding collateral pledged by that insurer-member. This bill will also ensure the FHLB will be able to offer healthy insur- ance company members loans with more favorable collateral terms. Due to differences between federal and current State law, federal home loan banks require more stringent and burdensome collateral terms from New York-domiciled insurance companies, even if the credit worthiness of a New York-domiciled insurance company is superior to other members of the bank. Healthy and troubled insurance companies will likely not have access to needed liquidity to help stabilize them in market disruptions while insurance companies in other states where the bill has passed, will have access to that liquidity. Similar legislation following the National Association of Insurance Commissioners (NAIC) guidelines has passed in 32 states (including New Jersey and Massachusetts within the past two years) Puerto Rico and the U.S. Virgin Islands. The legislation was also endorsed by the National Council of Insurance Legislators (NCOIL) in July 2023

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.