A05600 amends New York’s Insurance Law to address how delinquency, rehabilitation, and liquidation proceedings involving insurer-members of a Federal Home Loan Bank are handled. The bill limits a receiver’s ability to void certain transfers made under a Federal Home Loan Bank security agreement before formal proceedings begin, so long as the transfers were made in the ordinary course of business and without actual intent to hinder, delay, or defraud creditors. It also protects certain stock redemptions or repurchases by a Federal Home Loan Bank from being voided under specified timing and approval conditions.
The bill further requires a Federal Home Loan Bank, upon request from a receiver, to establish a prompt process for releasing excess collateral, returning collateral after all secured obligations are paid, handling fees and deposit accounts, and redeeming or repurchasing required stock or excess stock. It also directs the bank to provide acceptable options for renewing or restructuring advances to defer prepayment fees when permitted by law and policy, and to support the department’s efforts to facilitate collateral substitutions, transfer agreements to purchasers or other members, provide additional liquidity, and otherwise support orderly proceedings. The bill also authorizes confidential information-sharing about an insurer-member’s financial condition, underwriting, and credit opinions, while preserving federal law limits on access to advances.
In addition, the bill bars courts or receivers from staying, enjoining, or prohibiting a Federal Home Loan Bank from exercising rights under a security agreement tied to collateral pledged by an insurer-member. It also prevents a receiver from disavowing, rejecting, or repudiating a Federal Home Loan Bank security agreement or related pledge, collateral, guarantee, or credit-enhancement arrangements. The act takes effect immediately.
The bill’s impact is to narrow the powers of New York insurance receivers in proceedings involving insurer-members of Federal Home Loan Banks and to create more explicit protections for Federal Home Loan Bank collateral and related contractual rights. It would affect the Insurance Law provisions governing delinquency proceedings, voidable transfers, injunctions, and repudiation of contracts, while also shaping the treatment of advances, collateral, and stock interests tied to Federal Home Loan Bank membership.
The available voting history shows strong bipartisan support and little visible opposition: the Assembly Insurance Committee, Assembly Rules Committee, Assembly floor, and Senate floor all approved the bill overwhelmingly, with only one no vote recorded in the Senate. No committee transcript is available, so the record does not show detailed debate, but the unanimous or near-unanimous votes suggest broad agreement that the bill clarifies and protects Federal Home Loan Bank-related rights in insurer insolvency proceedings.
The bill amends Insurance Law sections 7425, 7419, and 7409 to limit receivers’ avoidance, injunction, and repudiation powers in delinquency proceedings involving insurer-members of Federal Home Loan Banks. It protects certain pre-proceeding transfers, stock redemptions, and security agreements, and requires cooperation from Federal Home Loan Banks on collateral release, restructuring, and information sharing, thereby changing how insurer insolvencies interact with Federal Home Loan Bank financing arrangements.
The bill appears to have been received very favorably. It passed the Assembly Insurance Committee, Assembly Rules Committee, Assembly floor, and Senate floor by wide margins, including unanimous votes in the Assembly stages and only one dissenting vote in the Senate. With no committee transcripts available, the recorded history suggests broad consensus and little public controversy in the legislative process.
The main substantive tension is between protecting insurer receivers’ traditional powers in delinquency proceedings and preserving Federal Home Loan Bank contractual and collateral rights. Potential concerns would likely come from those worried that the bill constrains a receiver’s ability to unwind transactions, repudiate agreements, or marshal assets for creditors, while supporters likely view it as necessary to provide certainty for Federal Home Loan Bank advances and collateral arrangements. The vote record, however, indicates these concerns did not generate significant opposition in the Legislature.