Credit Unions Right to Accept Municipal Deposits Included in Governor's Proposed Mandate Reform Agenda

• by Credit Union Association of New York

ALBANY, NY (01/15/2010)(readMedia)-- Yesterday, Gov. David A. Paterson introduced a mandate reform agenda that would ease the burden on taxpayers and local governments during the continuing fiscal crisis. One of the mandate reform initiatives would allow local governments to bank at credit unions.

The inclusion of municipal deposit legislation in the Governor's mandate relief package, which accompanies the release of his budget, represents a major step forward in the Association's advocacy efforts to ensure credit unions' ability to offer this important service.

By amending several provisions of state law to provide depository flexibility, the State would allow credit unions to accept deposits from municipalities, which in turn would lower town operating expenses and save taxpayers money.

"The law addressing municipal funds was enacted in 1909 before credit unions existed in New York," said William J. Mellin, president/CEO of the Credit Union Association of New York. "The Association and the credit unions of New York applaud and thank Governor Paterson for his leadership on this important issue and his commitment to offering localities flexibility to choose where they do their financial business."

Currently, the only banking institutions in New York that are permitted to accept deposits from local and state governmental units are commercial banks and trust companies, effectively giving them a monopoly over the deposit of public funds.

Credit unions, as not-for-profit, service-driven financial institutions, offer fewer fees and higher savings interest rates. More importantly, they are 100-percent locally owned. Municipal deposits would enable them to further reinvest in their communities by offering more loans to members, small businesses and more.

"This proposal is a clear indication of the Governor's support for municipal deposit legislation," said Mellin. "On behalf of New York's 461 credit unions, we urge the legislature to act on this important mandate."

The Credit Union Association of New York has served as the trade association for the state's credit unions for 92 years. New York credit unions have assets of more than $48 billion and 4.3 million members. To learn more about the Association, visit www.cuany.org.

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