New York's thrifts came close to getting low-cost state money for business loans despite a decades-old clause in their charters forbidding them from accepting public deposits.

But the state Assembly Ways and Means Committee killed a bill to expand a low-interest state loan fund for commercial banks to include thrifts.

The Legislature adjourned for the year July 3. That means the bill, which had already passed the state Senate 55-0, must be reintroduced in both houses in January when the Legislature returns to Albany.

Low-Cost Funds

The Excelsior Linked Deposits Program offers $100 million in state funds to commercial banks at 2% to 3% below market rates. Banks, in turn, loan the money to small businesses at low rates.

Savings banks and savings and loans want access to this money, and the Community Bankers Association of New York State, which represents 124 thrifts, has been lobbying hard for the bill's passage.

But the thrift group is up against the New York State Bankers Association, the commercial banking group, which argues that letting savings banks join would constitute the deposit of government funds in thrifts, which is prohibited by state law.

Differing Interpretation

"We look at it as a lending program more than a public deposit program," said Thaddeus L. Antos, chairman of the Community Bankers Association of New York State, which represents the savings banks. "They're depositing these monies, which they hope will be lent out to businesses. So as far as we're concerned, it's quite different."

The New York State Independent Bankers Assoc-iation, representing smaller commercial banks, has declined to take a position on the bill.

The New York State Bankers has suggested funneling Excelsior funds to thrifts through the state's Business Development Corp., which offers small-business loans to borrowers who can't get bank loans.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.