Assoc. of Towns Supports Municipal Deposits for Credit Unions

ALBANY, NY (05/17/2009)(readMedia)-- The Association of Towns of the State of New York issued a Memorandum of Support May 8, 2009, which "calls upon the Governor and the New York State Legislature to pass legislation (A.4319 & S.717) that amends all applicable state law to allow local governments to deposit funds in credit unions and thrift institutions."

"We are thrilled that the Association of Towns has come out in support of this important legislation," said William J. Mellin, president/CEO of the Credit Union Association of New York. "The law addressing municipal funds was enacted in 1909 before the existence of credit unions. Clearly it is time to fix this antiquated law on the state level."

Escalating real property taxes needs to be addressed, according to the Association of Towns in its memorandum. Providing municipalities with ways to reduce expenses is one way to help lower those taxes. The group cited a recent economic study that showed local governments could save $12 to $16 million annually if they were able to do business with their local credit unions. Also noted was that "town officials like the idea of local tax dollars helping their local economy by providing choice in community banking."

Commercial banks currently enjoy a virtual monopoly over the deposit of state and local funds in New York State. In fact, New York is one of only 13 states not to allow municipalities the credit union option.

Bills have been introduced in both the Assembly (A.4319) and the Senate (S.717) this session. Assemblyman and Banks Committee Member Harvey Weisenberg (D-Long Island) and Senator and Senate Banks Committee Member Owen Johnson are the sponsors. The Association thanks them both for their support.

The Association will continue to work behind the scenes to encourage passage of the amendments to current banking law as it relates to municipal deposits so that local governments have the opportunity to keep their investments in their local communities.

"By retaining local money in communities through municipal deposits, credit unions will be adding funds to the lending pool at a time when funds have been somewhat scarce at more traditional financial institutions," added Mellin. "Allowing credit unions to accept funds from municipalities also makes it possible for credit unions to offer lower loan rates while creating more affordable loan products for their communities."

The Credit Union Association of New York has served as the trade association for the state's credit unions for 92 years. It is the fourth largest association in the country. New York credit unions have assets of more than $44 billion and 4.3 million members. To learn more about the Association, visit www.cuany.org.

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