TRENTON – Senate Majority Leader Stephen M. Sweeney today said if credit unions in the State get access to public deposits of government funds, it will boost the New Jersey economy and help fight the credit crunch locally.
“The infusion of funds from public deposits will enable credit unions to provide more loans to their members and help struggling small businesses,” said Senator Sweeney, D-Gloucester, Salem and Cumberland.
Under S-2357, just introduced by Senator Sweeney, credit unions whose deposits are insured by the National Credit Union Administration would be authorized to receive government funds as qualified public depositories.
“Credit unions lend locally to their members – they don’t send money out of state or to foreign countries,” said Senator Sweeney. “They tend to do the lion’s share of their loan business right where they are because that’s where their members are.”
The Senate Majority Leader said competition for public deposits by NCUA-insured credit unions will enable local government entities to get the best return on their deposits which will help taxpayers.”
Senator Sweeney said S-2357 would add not only NCUA insured credit unions from New Jersey to the list of eligible public depositories, but also out of state credit unions which maintain a branch office in New Jersey. Now, public depositories are limited to financial institutions insured by the Federal Deposit Insurance Corporation (FDIC).
“There is no reason to continue limits on competition for the public funds of local government units such as school districts, municipalities and counties,” said Senator Sweeney. “Properly insured credit unions provide just as much protection as do the financial institutions backed by the FDIC.”
Senator Sweeney’s bill would amend the 38-year old “Government Unit Deposit Protection Act” which currently limits public depositories to financial institutions whose funds are insured by the FDIC.
“It’s time to make our public depository laws reflect today’s reality that the financial strength of credit unions has grown significantly in recent years,” said Senator Sweeney. “They deserve to be fully in the mix as public depositories and when they are, taxpayers will benefit.”
The Sweeney proposal would apply to New Jersey credit unions that are chartered under the Federal Credit Union Act or the State’s Credit Union Act of 1984.
The bill was proposed last Thursday (Nov. 13th) and will likely be referred for consideration next by the Senate Commerce Committee.