Illinois Gov. Pat Quinn has signed into law opening the door for direct deposit of government funds into CUs with Chicago-area CUs getting the first crack at taking in municipal deposits.
Breaking a long impasse Illinois credit unions, starting first in Chicago collar counties, may at last start accepting municipal deposits under a new law made effective this month. The legislation was supported by both the Illinois Credit Union League and a county treasurers' trade group.
"We have a strong philosophy in local direct investment and we saw the need to include credit unions provided we could clear up some confusions in the law," explained Brian McDaniel, chief investment officer of Will County who along with his boss, County Treasurer Steve Weber, lobbied for the law change during the recent session.
McDaniel said he began this week sending out letters to 15-20 Will County CUs informing them of the change and soliciting investment interest regarding the $300 million in county funds. Including banks, there are 40 financial institutions eligible for the funds.
"For the credit unions we do have to do some due diligence work and stress testing to conform 5300 reports with our past experience on bank call reports," said McDaniel noting there are technical differences to be resolved.
Based on individual CU capital requirements, he said he expected the investment amounts per CU to be in the $15-$20 million range.
McDaniel noted that he is a director of the $284 million Abri CU in Romeoville and Weber is a director of Lincolnland Community Bank and thus "we've taken the policy position that we won't deposit funds with those institutions to avoid the appearance of a conflict of interest."
McDaniel said the eventual plan is to open up investment opportunities to CUs outside of Will County. "We expect also to reach out to some larger banks and credit unions in DuPage and other counties," he said.
"ICUL views H.B. 2101 as a win-win piece of legislation which will benefit counties, credit unions and, ultimately, the county taxpayers by affording counties the opportunity to receive competitive investment rates from local credit unions," the league said.
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