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News Now

CU System
N.J. bill includes CUs in banking development district program
TRENTON, N.J. (5/11/10)--State legislation that would create a New Jersey Banking Development District (BDD) Program was reported favorably from the state's Assembly Financial Institutions and Insurance Committee last week. Credit unions are included in the bill's definition of "bank," according to the New Jersey Credit Union League. The league has gone on record supporting the bill, said Chris Abeel, league government affairs director. "We believe it's a good thing credit unions are included in the bill. We think it helps build momentum for Government Unit Depository Protection Act (GUDPA) reform," Abeel told News Now. The latest bill, called the Bank Development District Act (A-1458), is sponsored by Assemblyman John Wisniewski (D-19), a co-sponsor of A-1597, which would enable local government entities to use credit unions as depositories, according to the league's The Weekly Exchange (Week of May 3). The state's Division of Banking would administer the program, to encourage establishing bank branches in underserved areas. A municipality, in conjunction with a bank, would submit an application to the commissioner of Banking and Insurance for the designation of a BDD. The state treasurer and municipalities in which a BDD has been designated would have the authority to select a BDD bank as a depository, subject to an agreement for a fixed rate of interest at or below the bank's posted rate. BDDs would still have to meet the state's GUDPA requirements to be eligible as a municipal depository. While the bill includes credit unions, credit unions continue to be excluded from GUDPA and would be eligible only for state funds under this legislation, said Abeel. "Legislation was enacted last year that temporarily expands the range of allowable investments available to the director of investments for state cash management (municipal monies on deposit with the state) and pension funds to include federally insured instruments offered by community banks and credit unions," Abeel added. "This was the first time the National Credit Union Share Insurance Fund insurance was given parity with the Federal Deposit Insurance Corp. in New Jersey law." "GUDPA was enacted before credit union deposits became federally insured. The more New Jersey law recognizes the equality of credit union deposit insurance, the harder it becomes to argue against GUDPA reform," Abeel concluded.


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