The first-ever Oregon Credit Union Public Funds Collateralization program launched Monday, allowing qualified credit unions in the state to accept public funds deposits that exceed federal insurance limits, according to the Northwest Credit Union Association.
Prior to the program's launch, only banks could accept public deposits beyond the $250,000 insurance limit. The new program gives governments additional options for depositing public funds, assuring that taxpayer money is safe even if a financial institution fails.
Though the NCUA insures deposits of up to $250,000, the Oregon Credit Union Public Fund Collateralization program insures deposits of more than $250,000 with securities as collateral. In the event of a loss, the state can recover public funds by selling the collateral.
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"It makes sense for local governments to move some of their money from Wall Street to Main Street," said John Trull, NWCUA director of regulatory advocacy. "We are pleased to help facilitate the program."
The 10 credit unions that established the new collateralization pool are: $912 million Unitus Community in Portland, $143 million Pacific Crest FCU in Klamath Falls, $785 million OSU FCU in Corvallis, $3.1 billion OnPoint Community CU in Portland, $987 million Advantis CU in Milwaukie, $445 million MAPS CU in Salem, $766 million Northwest Community CU in Eugene, $119 million Old West FCU Union in John Day, $152 million Wauna FCU in Clatskanie, and $1.1 billion Oregon Community CU in Springfield..
The cities of Beaverton, Corvallis, Independence, Klamath Falls and Portland have signed letters pledging to deposit funds in excess of $250,000 in one or more of the participating credit unions, according to the NWCUA.
The amount of required collateral from each credit union will depend on its uninsured public funds balance, which must be reported to the state's Treasury division either weekly or monthly. According to a news release from Washington State Treasurer Ted Wheeler's office, the minimum collateral requirement can range from 10% to 110% of uninsured public funds deposits, depending on the capitalization level of the individual credit union and the number of participating credit unions in the program.
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