Magazine article American Banker

NY Legislature Passes Bill Allowing Stock Conversions

Magazine article American Banker

NY Legislature Passes Bill Allowing Stock Conversions

Article excerpt

ALBANY, N.Y. -- New York state-chartered savings banks got the nod for conversion to stock ownership Monday after passage of enabling legislation in both houses of the state legislature.

The Senate voted 48-0 and the Assembly 144-2 in favor of the measure, which now goes to Gov. Mario M. Cuomo for signature.

The legislation implements a proposed constitutional amendment approved in the November elections. The proposal was to permit state-chartered savings and loan associations and savings banks to convert to the stock form of ownership.

The rationale behind the legislation was the creation of much-needed flow of capital into the banking industry.

Superientendent of Banking Vincent Tese said that minor changes in the proposed regulations will be necessary as a result of the legislation, but he anticipates quick passage by the banking board. After the governor signs the bill, he predicted, savings banks will be able to consider using the stock option "toward the latter part of the month."

Original plans called for passage of the legislation early in January, but this was delayed because of amendments offered by Assemblyman Herman D. Farrell, D-New York, chairman of the Assembly Banking Committee. The amendments protect against windfall profits in the stock conversion, call for plain language in documents distributed to the public, and tighten several provisions previously left to the discretion of the state banking board.

Under the legislation, the state stock option differs from federal regulations by requiring a 75% approval by depositors either attending the conversion meeting or voting by proxy. …

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