Local Governments Woo Credit Unions as Banks Cry Foul
At a time when it’s difficult to convert deposits to loans, does it make sense to open the door to an additional flow of money into a credit union?
That’s one of the questions surrounding the acceptance of deposits of public funds. While federally-chartered credit unions can offer such accounts, a tally by the League of Southeastern Credit Unions found that in 17 states the transactions are still forbidden to those with state charters. Efforts are underway to change that in states such as Alabama, Florida and Ohio. In New Jersey and Oregon, campaigns have succeeded with efforts continuing to clear up the details.
“I have heard from more and more credit unions that have been contacted by their local school districts, municipalities and other governmental units,” he said. “They’re looking for the best return on any deposits. Just like individuals, public entities have been shopping around.”
Last year, enabling legislation was introduced in the Florida legislature. It received a hearing and passed a House committee, but didn’t go any further.