A network that allows school districts and municipalities to invest in certificates of deposit at FDIC-insured banks could be opened up to include credit unions if a Michigan bill passes.
Introduced by Michigan Sen. Tony Stamas (R-Midland), Senate Bill 195 would extend participation in the Certificate of Deposit Account Registry Service program to credit unions. When a large deposit is placed with a member of CDARS, that institution uses the network to place funds into CDs issued by banks. According to CDARS, this occurs in increments of less than the standard FDIC insurance maximum to ensure that both principal and interest are eligible for full FDIC insurance.
The bill recently passed in the Senate by a 34-0 vote and was referred to the House Banking and Financial Services Committee for adoption.
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In 2008, when legislation was enacted to allow municipalities and school districts to invest in CDs with financial institutions participating in CDARS, the Michigan Credit Union League said it worked to change the restriction before passage however, the bills were fast tracked. The league continues to work with Michigan's House and Senate Banking Committee chairs to include credit unions in CDARS.
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