New York Capitol building in Albany, N.Y. (Source: Shutterstock).
The New York State Legislature adjourned last week without passing legislation that would have allowed municipalities to deposit funds in credit unions.
The issue gained prominence this year, when the state Assembly's Banks Committee held a hearing on the issue, with credit union officials facing off with bankers, who vehemently opposed the legislation.
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New York Credit Union Association President/CEO William Mellin said the legislation did not advance to the floor in either legislative chamber, although he said he believed the legislation would have passed if it had.
"The language of the legislation was negotiated in good faith with both houses, and we're disappointed they chose to not advance the bills to the floor," Mellin said.
He added that the association will continue to push for the issue.
Meanwhile, the New York Bankers Association applauded the decision by legislators.
"NYBA is pleased to report that, once again, we were able to hold back the credit unions in their strenuous attempts to gain unlimited authority to accept municipal deposits," the association said, in a legislative update.
However, New York credit union officials said they were pleased that the legislature agreed to allow credit unions access to the state Banking Development District Program for the first time.
The legislation now awaits the signature of Gov. Andrew Cuomo.
The BDD program, created in 1997, is designed to encourage finance institutions to establish branches in economically distressed areas of the state where there is a need for banking services.
Institutions that are approved for a BDD designation are eligible to receive up to $10 million in subsidized public deposits. The deposits are intended to lower the financial risks the branch may incur as a result of opening in an underserved area.
"By expanding the Banking Development Districts Program, credit unions will now be able to provide critical financial services to even more underserved New Yorkers," Mellin said.
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