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N.Y. CUs supported by towns on municipal deposits
ALBANY, N.Y. (5/19/09)--The Association of Towns of the State of New York issued a Memorandum of Support May 8 that “calls upon the governor and the New York State Legislature to pass legislation that amends all applicable state law to allow local governments to deposit funds in credit unions and thrift institutions.” “The law addressing municipal funds was enacted in 1909 before the existence of credit unions,” said William J. Mellin, president/CEO of the Credit Union Association of New York. “Clearly it is time to fix this antiquated law on the state level.” Escalating real property taxes needs to be addressed, the Association of Towns said in its memorandum. Providing municipalities with ways to reduce expenses could help lower those taxes. The group cited a recent economic study that showed local governments could save $12 million to $16 million annually if they could do business with their local credit unions. Also noted was that “town officials like the idea of local tax dollars helping their local economy by providing choice in community banking.” Commercial banks currently enjoy a virtual monopoly over the deposit of state and local funds in New York State, the credit union association said. New York is one of 13 states that don’t allow municipalities the credit union option. Municipal Deposit bills were introduced in both the Assembly (A.4319) and the Senate (S.717) this session. State Rep. and Banks Committee Member Harvey Weisenberg (D-20), and Senate Banks Committee Member Owen Johnson (R-4) are the sponsors. The credit union association will continue to work behind the scenes to encourage passage of the amendments to current banking law on municipal deposits so local governments can keep their investments in their local communities. “By retaining local money in communities through municipal deposits, credit unions will be adding funds to the lending pool at a time when funds have been somewhat scarce at more traditional financial institutions,” Mellin said. “Allowing credit unions to accept funds from municipalities also makes it possible for credit unions to offer lower loan rates while creating more affordable loan products for their communities.”


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