New York credit unions are now able to receive public deposits for the first time in the state’s history.
Last Friday Gov. Andrew Cuomo signed into law new legislation that allows credit unions to participate in the state’s Banking Development District Program. The legislation received bipartisan support and passed both houses of the legislature earlier in the year.
“Passage of this law is a major victory for credit unions and a major victory for New Yorkers – especially those who reside in underserved and under-banked areas,” William Mellin, president and CEO of the New York Credit Union Association, said in a statement.
Mellin continued to praise Cuomo, a Democrat, in written remarks for strengthening the New York credit union movement.
The BDD program encourages financial institutions to build branches in economically distressed communities within New York that show a need for banking services. Institutions approved for a BDD designation are able to receive up to $10 million in subsidized public deposits. Other benefits include receiving lower market-rate deposits from the state of New York, which are intended to lower financial risk that branches may incur when entering underserved communities.
NYCUA noted that while BOD was launched in 1997, it has historically been underutilized by banks and trusts. Credit unions had not previously been allowed to participate because language in the original bill establishing the program did not explicitly include CUs.
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“With this new law, more New Yorkers will have critical access to the credit union and financial system,” Mellin said.
