Senate approves ban on state‑chartered banks investing in private prisons after extended debate

The New York State Senate on May 20, 2025, passed Senate Print 114, a bill that prohibits banks chartered by New York from providing financing or investing in companies that own or operate private correctional facilities.

The measure and vote: Senator Cleary, the bill’s sponsor, brought the measure to the floor and framed it as an extension of New York’s existing prohibition on operating private prisons. The clerk called the roll after debate; the final tally announced on the floor was 37 ayes, 22 nays and the bill was recorded as passed.

Why it matters: The statute prohibits a category of financial activity by state‑chartered banks — specifically, financing and investment in entities owning or operating private correctional facilities — tying state banking charters to the state’s policy position on private prisons. Supporters said the change aligns banking activity with a state policy that already bars private prison operations within New York.

What supporters said: Senator Cleary argued the bill “sets a very clear moral and policy principle” and noted that New York already bans private prisons under the Correction Law (cited on the floor as section 121). Senator Krueger and other supporters said the measure prevented New York entities from profiting from facilities the state does not permit.

What opponents said: Senator Borrello opposed the legislation, saying it set a “slippery slope” and warned that state chartered banks — often community banks — should not be restricted in investment decisions. In floor remarks during debate he said, “who the hell are we to tell anybody else how to run their prisons?” and announced he would vote no.

Implementation and limits: The statute, as read on the floor, bars state‑chartered banks from financing or investing in the specified enterprises. The sponsor characterized the step as moral and policy alignment rather than an economic policy. The bill references existing Correction Law provisions cited on the floor; the legislative text and final enrolled bill will specify implementing definitions and enforcement mechanisms.

Next steps: The enacted statute will require the Department of Financial Services and banking regulators to apply the new restriction to state‑chartered institutions. The clerk’s announcement includes the vote tally but not further implementation guidance; agencies named in the law will be responsible for follow‑up guidance or enforcement as indicated in the statute.