New York Credit Union Association staff and credit union advocates throughout New York were in Albany yesterday for an important hearing on public deposits in credit unions.
The hearing was hosted by state Assembly Banks Committee Chairman Kenneth Zebrowski, D-Westchester-Rockland, and Assembly Local Governments Committee Chairman Fred Thiele Jr., D-Long Island.
This hearing marked the first time the credit union movement has had the opportunity to make the case for municipal deposits in a hearing format. Several credit union leaders testified at the hearing, including Association President/CEO William J. Mellin; Eric Levine, president/CEO of Alternatives FCU; Pamela Heald, president/CEO at Reliant Community CU; Linda Armyn, SVP of corporate affairs at Bethpage FCU; and Bill Crane, chief administration officer and general counsel at CFCU Community CU. Additionally, many credit union employees were in attendance.
The advocates discussed legislation A.3262, which is sponsored by Zebrowski, and would allow credit unions to accept deposits from municipal corporations. Passage of this legislation would give municipalities’ depository choice, save taxpayer dollars and generate revenues that exceed the combination of interest and tax revenues garnered from bank income on public deposits.
“Allowing credit unions to serve municipalities is a logical and pragmatic next step in the best interests of the people of New York,” Mellin testified. “Adding credit unions to the list of possible depositories will enhance the competitive market for public funds, which is in the best interests of government and the people.”
Mellin concluded: “Let’s stop hindering credit unions from helping consumers and New York taxpayers. Given New York’s now permanent cap on property tax increases, we can and we should get this done this session. Now is the time to pass legislation allowing credit unions to accept municipal and state deposits. Now is the time to give government entities the option of using a credit union.”
The hearing also featured two panels of bank executives – one headed by the New York Bankers Association and one led by the Independent Bankers Association of NYS. The two groups maintained credit unions had an unfair advantage over banks because of their tax status and exemption from Community Reinvestment Act requirements.
Additionally, representatives from county governments urged the state to proceed with caution on the matter. They questioned credit unions’ cybersecurity practices and standards—which are generally identical to banks’—and seemed unaware the industry is overseen by state and federal regulators, with deposits insured by NCUA. They also expressed an unwillingness to break with current banking relationships, even if credit unions could provide better returns on their deposits.
The hearing concluded with testimony from Brian Fessler, deputy director of governmental relations for the NYS School Board Association, and Michael J. Borges of the Association of School Business Officials. The two expressed support for depository choice.
“Our interest in this issue is pretty straightforward,” said Fessler. “We’re in favor of flexibility, options and local control… We heard today that on average credit unions generally present or offer better rates on return for deposits. That can generate savings for a school district, and as we heard here a number of times, save taxpayers’ dollars, and/or create additional opportunities for programs and services for the students we educate on a daily basis.”
The Association strongly encourages all New York credit unions—both state and federal charters—to show their support for both legislative bills by emailing their members of the Assembly and state Senate, or submitting written testimony, which can still be submitted.
To submit a letter to lawmakers, visit the Association’s Action Center (login required).
To view pictures from the hearing, visit the Association’s Facebook page.