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CU System
Banking CU bills make progress in New Jersey
TRENTON, N.J. (2/25/11)--New Jersey Gov. Chris Christie signed into law a measure to create a state Banking Development District Program to encourage banks to establish branches in underserved areas, said the New Jersey Credit Union League (The Daily Exchange Feb. 24). While the bill's definition of a bank includes credit unions, credit unions technically are excluded because under a 40-year-old statute, they are barred from becoming eligible municipal depositories. The statue, the Government Unit Depository Protection Act (GUDPA), was enacted before credit union deposits became federally insured. A bill that would update the GUDPA law to allow federally insured credit unions to quality as eligible public depositories has passed the state Senate and is pending in the Assembly Financial Institutions & Insurance Committee. Also, the state Assembly passed a bill to make permanent a temporary authorization that expanded the range of investment vehicles for the New Jersey Cash Management Fund and state pension funds to include obligations guaranteed by the Federal Deposit Insurance Corp. or the National Credit Union Share Insurance Fund. The Senate must pass the bill next before it goes to the governor for signature. "While both developments are moves in the right direction, they fall short of enabling credit unions to better serve New Jersey's communities and property tax payers," said NJCUL President/CEO Paul Gentile. "The irony isn't lost on credit unions. It would seem that banks need an incentive to do what credit unions readily embrace, and yet even when technically included, credit unions are still excluded because of a decades-old conflicting statute," he added Although credit unions are considered safe for municipal deposits and pension funds channeled through the state, "local governments are still denied the benefits of increased competition when soliciting bids from potential depositories," he said.


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