The final push for New Jersey legislation allowing credit unions to receive municipal funds may not come until September, but CUs were making their case about filling a void left by the market exit of JPMorganChase regarding $500 million in deposits.
In an e-mailed bulletin, the New Jersey Credit Union League countered suggestions by a banking regulator that community banks be given first crack at the funds that for years have been deposited in 200 New Jersey government units.
"Many New Jersey's credit unions are ready, willing and able to enter this market creating additional competition and increasing the likelihood deposits will be invested locally," said Paul Gentile, league president/CEO."It makes no sense to continue to exclude credit unions under a forty-year old law passed before credit union deposits became federally insured."
Chase notified the state earlier this month it no longer wanted a part of that business because of collateral concerns on a bank-run risk pool fearing excess liability.
The league's bulletin, highlighting the June 10 state Senate adoption of enabling legislation, comes as the New Jersey regulator, Thomas Considine, with no mention of CUs suggested banks fill the Chase void encompassing a $500 million portfolio.
It is a windfall for community banks, he said. A spokesman for Considine, who is head of the New Jersey Department of Banking and Insurance, told Credit Union Times he maintains a long held view that banks deserve priority over CUs considering tax exempt and CRA issues clouding the CU role, a point vigorously disputed by the league.
But if the legislature finds differently, "he will abide by that decision," he said.