Turning aside appeals from the banking lobby, New Jersey Gov.Chris Christie has signed the municipal deposit bill empoweringcredit unions to start accepting government funds.

The legislation, to go into effect later this year, would allowCUs for the first time to accept public funds of counties, schoolboards, municipalities and other local government entities.

The New Jersey Credit Union League hailed the bill's enactmentas a victory both for the industry following a long-fought slugfestwith the New Jersey Bankers Association and for consumers, theleague said, “in bringing the best possible return” on publicdollars.

As early as last week, the league had mounted a vigorouspostcard campaign directed at the Republican governor's office toensure he signed the bill, which has been on his desk for more than a month after continuing to drawbanker opposition. Among those voicing concern at one time wasChristie's own Department of Banking & Insurance.

Until the bill's passage, CUs were prohibited from serving aseligible public depositories by the Governmental Unit DepositProtection Act that mandates depositories have FDIC insurance,despite similar NCUA authority.

“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 onaverage pay better rates and offer lower fees than banks, so publicentities will now have a new option to consider as they seek outthe best yield in these tough economic times.

This market, he said, “has historically been dominated by asmall group of banks.” CUs, he said, “will bring competitionto public deposits that will likely drive better returns and evenif credit unions aren't ultimately chosen by the public entity,their presence in the market raises the competitive bar.”

The league noted that the bill came to the governor's desk “withstrong bipartisan support having passed in the Assembly 67-8 inlate June” after winning state Senate approval in June 2010 by a vote of 29-6.

The legislation, said the league, also had the backing of theNew Jersey League of Municipalities, the New Jersey School BoardsAssociation and the New Jersey Association of Counties.