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Municipal deposits measure introduced in N.J.
TRENTON, N.J. (11/20/08)--A measure to allow New Jersey credit unions to accept municipal deposits was introduced in the state Senate last week. It would allow credit unions in the state to become eligible depositories for public entities such as county and municipal governments and school boards. The bill was introduced by Majority Leader Steve Sweeney (D-3) and in the Assembly by Housing and Local Government Affairs Committee member Fred Scalera (D-36) and Assemblyman Doug Fisher (D-3). The legislation repeals a provision of New Jersey's Government Unit Depository Protection Act, which, since its enactment in 1970, specifically precluded local government entities from using credit unions for their banking needs. The legislation also amends the state credit union act to enable state-chartered credit unions to accept municipal deposits, affording them parity with federally chartered credit unions in the area. “We believe allowing credit unions to get involved in municipal deposits will create more competition and ultimately be good for the taxpayers of New Jersey,” Paul Gentile, president/CEO of the New Jersey Credit Union League, told News Now. “Approximately a third of states allow credit unions to accept municipal deposits. With more than 500 municipalities in New Jersey, we believe it's key that credit unions here are allowed to compete.” Having the Senate majority leader sponsor the bill is a positive development, Gentile said. “Many states allow credit unions to compete for public deposits and afford taxpayers the numerous benefits of doing business with democratically controlled, not-for-profit, financial cooperatives,” Gentile said. “Including New Jersey among those is the league's No. 1 state legislative priority.” The cash infusion from public deposits will allow credit unions to make more loans available to their members and needy small businesses, Sweeney told The Gloucester County Times Wednesday. Because credit unions tend to be locally focused and lend to their members, they don’t send money out of state or abroad, Sweeney told the newspaper. The majority of credit unions’ loans are made locally because that’s where their members live, Sweeney added.
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