NY Gov. Cuomo Signs Bill Allowing CUs to Accept Public Deposits From Key Program
“With this new law, more New Yorkers will have critical access to the credit union and financial system,” the state league’s CEO says.
New York Gov. Andrew Cuomo has signed legislation allowing credit unions to participate in the state’s Banking Development District program, marking the first time credit unions will be eligible to accept public deposits in that state.
Launched in 1997, the program is intended to provide financial institutions with incentives to locate branches in communities that are designated as underserved by the state Department of Financial Services.
Under the BDD program, financial institutions that open branches in such communities are eligible to receive below-market-rate deposits that are intended to lower the financial risks the institutions might incur.
New York Credit Union Association President/CEO William Mellin said the legislation is a major victory for credit unions.
“With this new law, more New Yorkers will have critical access to the credit union and financial system,” he said.
Bankers, who had fought the legislation, disagreed, saying that since credit unions are not subject to the Community Reinvestment Act, they are not required to lend in their communities.
“Allowing credit unions to participate in the BDD program would also therefore allow such institutions to receive deposits of state taxpayer funds,” Michael Smith, president/CEO of the New York Bankers Association, said. “Credit unions pay no federal, state or local income taxes, no sales taxes and do not pay” the state’s transit surcharge.
Bankers and credit union officials battled during the last legislative session over whether credit unions should have total access to state deposits – an issue that is likely to surface again in the legislative session next year.