The economic downturn has had far-reaching effects. From business lending to job creation, legislation to finances, the country is recovering and building a secure future. The crisis is over, and credit unions, as community cooperatives, are an ideal catalyst for the economic development of consumers, businesses, and municipalities. To this end, several advocacy groups around the country are working to pass legislation that would increase deposit opportunities for area credit unions.
One such movement is taking place in New York, where state statute dictates only commercial banks be permitted to accept municipal deposits. The Credit Union Association of New York is working with elected leadership to change the law. It also is educating the state and the country about the benefits of allowing local governments the option of growing their money with a local institution that has a "proven track record of responsible lending and conservative management."
"It's time to change the regulation, bring it up to date, and allow municipalities the option to utilize a credit union," says CUANY president William Mellin. "We have credit unions that are sponsored by a municipality, yet the municipality is prohibited from using it for deposits."
One major benefit for municipalities, Mellin says, is in the implication for local investment and development. Money that is deposited into a credit union is much more likely to be reinvested in the community or distributed to locals in need of loans.
"There is opportunity for economic recovery without spending one taxpayer dollar," Mellin says.
The economic downturn has lawmakers looking for cost effective ways to stimulate local economies and development, and although it is not a great environment for passing legislation, support from both sides of the aisle has Melli optimistic about change.
"Each year we bring it up; each year we get a little closer," Mellin says. "This year there is a good chance of getting the legislation to go to the floor in both houses."
The bill has legislative legs, but it also has support from proponents in high places. New York City mayor Michael Bloomberg proposed a program in January that would deposit $25 million into New York City-based credit unions with the understanding those institutions would utilize the funds for economic development in depressed areas of the city. In his 2010-2011 executive budget agenda, New York Governor David Patterson included a request for the expansion of "municipal depository choice."
Change is on the horizon for the state of New York, but the activity in the Northeast has implications for credit unions all over the United States. CUANY's legislative agenda is a harbinger of a national trend. Currently, CUANY estimates there are approximately 20 states that give municipalities the option of keeping their deposit accounts with credit unions. In states where it is not an option, credit union groups are making their voices heard.
In Washington state, for example, the Washington Credit Union League is supporting legislation that would allow public entities to deposit up to $100,000 in a credit union. Although similar legislation has failed to pass in previous years, the league is hopeful this year's bill, which was proposed by the chairman of the Senate Financial Institutions Committee, will pass.
In New Mexico, state representative Brian Egolf is pushing legislation that would keep the state's money in local financial entities, including credit unions chartered in New Mexico.
It is a trend Mellin finds promising, both for the future of credit unions and for the future of the free market.
"Let's open up the market," Mellin says. "Let credit unions participate and compete for municipal deposits."