Washington governor signs CU public funds law

OLYMPIA, Wash. (3/16/10)--Washington Gov. Chris Gregoire signed legislation Friday that allows public units to deposit funds in state-chartered credit unions.

The new law--Senate Bill 6298, which goes into effect July 1, 2011--adds state-chartered credit unions to the roll of eligible public depositories.

The legislation adds 70 local Washington-grown credit unions to the list of 105 public depositories and brings with it more community-based bank choices for the state public units, said the Washington Credit Union League.

The new law also strengthens the safety of those public dollars by diversifying risk at a time of increasing bank failures and when most of the state's public funds are maintained in too-big-to-fail financial institutions, the league said.

"State leaders need more options for public funds in top tier financial institutions," said John Annaloro, league president/CEO. "Additionally, the state has a fiduciary responsibility to return the nest rates on their investments. This is a smart change."

Credit unions generally offer better rates of return on savings and investment products than banks, according to some studies, the league said.

The new law, however, will limit public deposits in credit unions by any single public unit to $100,000, and credit unions are not required to participate, the league said.

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