ATLANTIC CITY, N.J. (7/8/10)--The New Jersey Credit Union League outlined the benefits of allowing credit unions in the state to accept municipal deposits as proposed in state legislature, in an article in the Press of Atlantic City
(July 4) . Paul Gentile, league president/CEO, said diversifying deposits to credit unions from banks along would reduce risk. "If we've learned anything from the economic meltdown, it's that you don't want to have all of your eggs in one basket," he told the publication. Allowing credit unions to accept the deposits would benefit local government entities in these ways, he said:
* Credit unions receiving the deposits would be more likely to make deposited funds available to local businesses and consumers. While banks reduced business lending by 15% in 2009, credit unions increased their small business lending by 11% last year. * Depositors get better interest rates from credit unions, which will benefit the taxpayer, he said.
Liberalizing the deposit act would help the public realize that credit unions are full-functioned financial institutions that almost anyone can join, Gentile said. At least 20 states allow credit unions to be governmental depositories, the article said. About $16 billion is on deposit from various government entities and would be subject to the act. The Senate has passed a bill allowing municipal deposits in credit unions, and a companion bill has been introduced in the state Assembly. It is in the Financial Institutions and Insurance Committee.