In today’s terse economic climate, it’s not often that a bill surfaces with bi-partisan support, let alone a bill to help out a single New York bank.
The provision is targeted specifically at one of the nation’s 7,307 banks—New York based Emigrant Savings Bank. It’s a bank owned by billionaire Howard Milstein, who is known for making contributions to political candidates, including those who voted for the legislation on Thursday.
Some skeptics question the bipartisan legislation as catering to those with means and money.
According to a Wednesday piece in Politico:
“The sponsor of the Emigrant Bank bill is Rep. Michael Grimm, a Staten Island Republican. In March, Grimm received $2,500 in campaign contributions from Howard Milstein, Emigrant’s chief executive officer, and his wife, Abby, according to campaign-finance records.
The bill has eight co-sponsors, including others who have received campaign cash during the 2012 election cycle from Milstein and members of his family.
Rep. Carolyn McCarthy, a Long Island Democrat, received $4,000 last year from the Milsteins and their son, Michael. Democratic Rep. Gregory Meeks of Queens received $3,000 from Milstein and his wife in 2011 while Rep. Carolyn Maloney, a Manhattan Democrat, received $2,000.”
In a statement to ABC News, Grimm, R-N.Y., criticized the media for pushing attention away from helping the families of New York who rely on Emigrant, which would have had to reduce their lending by “up to $4.5 billion would be reprehensible.”
Emigrant Bank has been serving the boroughs of New York City since the 1850s.
“The fact that the media wants to distort the intentions of this sound legislation is of no consequence,” Grimm said. “I ran for office to be a leader and to do the right thing, and this legislation continues to accomplish those goals… I am proud of the overwhelming bipartisan support that shows how Congress can work together for the benefit of the local communities we represent.”
The bill that passed the House Financial Services Committee on Thursday allows Emigrant Savings Bank of New York to avoid a $300 million loss of capital as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The one-sentence piece of legislation, which was first reported on May 18 in American Banker, amends the Dodd-Frank Act by simply changing a date from December 31, 2009, to March 31, 2010, thereby excluding Emigrant Bank from a provision of the Dodd-Frank Act that affects banks with $15 billion or more in assets, a category Emigrant fell into briefly.
Grimm, who introduced the bill, said today in a statement to ABC News that the legislation “fixes a problem that should have never needed to be fixed, but was an unintended consequence of the Dodd-Frank Act.”
The unintended consequence stemmed from an overcautious Emigrant Bank in 2009 in the beginning of the financial crisis, who out of concern that its $100,000-plus depositors were uninsured borrowed approximately $2.3 billion from the Federal Home Loan Bank of New York for protection. When the FDIC raised the insured deposit cap to $250,000, Emigrant returned the money.
This temporary loan pushed Emigrant’s total assets over the $15 billion threshold, subjecting it to the Dodd-Frank provision. According to the Chief Regulatory Officer for Emigrant Bank Richard C. Wald, Emigrant has $10.5 billion in assets currently.
During a May 18 hearing House Financial Services Committee, ranking member Carolyn Maloney said it was only because Emigrant was “trying to do the right thing” that it now faced categorization as a larger bank than it is.
The bill has drawn no objections from bank regulators or the Obama administration.