At the end it was touch-and-go, but at last New Jersey Gov. Chris Christie has signed the municipal deposit bill empowering credit unions to start accepting government funds.
The banking lobby had fought unsuccessfully this summer for a veto of the bill by the Republican governor on grounds that CUs lack capacity to handle public funds and don’t deserve them because of the tax exemption.
Under the measure slated to take effect later this year, CUs for the first time can accept public funds from counties, school boards, municipalities and other local government entities.
The New Jersey Credit Union League hailed the bill’s enactment as a victory both for the industry following the slugfest with the New Jersey Bankers Association and for consumers “in bringing the best possible return” on public dollars.
When there was some question the governor might not sign the bill, the league mounted a vigorous postcard campaign recruiting volunteers and employees to write the governor with 5,000 cards. The bill had been on his desk for more than a month with Christie signing it Aug. 20.
Among those voicing concern about the bill was Christie’s own Department of Banking & Insurance, which is heavily influenced by the banking lobby, noted the league.
Until the bill’s passage, CUs were prohibited from serving as eligible public depositories by the Governmental Unit Deposit Protection Act that mandates depositories have FDIC insurance.
“New Jersey's credit unions can now compete with banks in the $15 billion public deposit market,” said Paul Gentile, president/CEO of the league. “Credit unions on average pay better rates and offer lower fees than banks, so public entities will now have a new option to consider as they seek out the best yield in these tough economic times.”
A similar law was passed in Illinois earlier this year.