[Banking\Credit Union Bill]
NYCUA President/CEO William J. Mellin said: “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. Gov. Andrew Cuomo should be commended for continuing to strengthen the New York credit union movement.”
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Gov. Andrew Cuomo last night signed into law legislation that will allow credit unions to participate in the state Banking Development District Program.
The legislation, S.727-A/A.3320 passed both houses of the Legislature earlier this year with bipartisan support, and the New York Credit Union Association strongly supported its passage.
The Assembly version of the bill was introduced by Assemblyman Kenneth Zebrowski, D-New City, and the Senate version was introduced by Sen. Velmanette Montgomery, D-Brooklyn.
Recently, Sen. Montgomery spoke out on her support for the measure saying:
“This important legislation has been delivered to Governor Cuomo and awaits his signature. I am asking for your support to get the “Credit Union Bill” (S727-A/A3320 – Zebrowski) signed into law. It would allow credit unions to receive the same economic incentives as big banks to operate in underserved communities through the Banking Development District (BDD) program. The BDD program was enacted to incentivize banks to locate branches in communities designated as underserved by the Department of Financial Services. Participating banks are eligible to receive up to $10 million in subsidized deposits from the state of New York to lower financial risk and encourage lending in these communities. Many of these areas have few to no banking institutions and instead have to rely on alternative, costly and sometimes predatory options to fill in the gaps.
“There are 355 credit unions in New York, serving over 5 million members and they are uniquely positioned to advance the goals of the BDD program. Credit unions are nonprofit, locally owned institutions that answer to their members. “They make less risky investments and earnings are returned to their members through lower interest rates on loans and more favorable rates on savings and retirement accounts. Their structure makes them highly responsive to the needs of their clients and they prioritize being present and giving back to the communities they serve.”
The BDD Program was created in 1997 to encourage financial institutions to establish branches in economically distressed communities throughout New York where there is a demonstrated need for banking services. The program has been largely underutilized by banks and trust companies, yet credit unions remained unable to participate due to the language in the original legislation establishing the program.
Institutions that are approved for a BDD designation are eligible to receive up to $10 million in subsidized public deposits and other benefits, including below market-rate deposits from New York state. These deposits are intended to lower the financial risk that the branch may incur when opening in an underserved community, usually comprised of low- and moderate-income households.
Notably, the legislation will mark the first time in state history that credit unions will be permitted to receive public deposits (NYCUA continues to advocate for additional legislation that would expand credit union deposit access to the state and local governments.)
NYCUA President/CEO William J. Mellin said: “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. Gov. Andrew Cuomo should be commended for continuing to strengthen the New York credit union movement. With this new law, more New Yorkers will have critical access to the credit union and financial system. On behalf of the New York credit union community, I’d like to thank the governor, as well as Sen. Montgomery and Assemblyman Zebrowski for their leadership.”
About the New York Credit Union Association:
For more than 100 years, the New York Credit Union Association has served as the trade association for the state’s credit unions, which collectively hold $84 billion in assets and serve 5.9 million members. NYCUA strives to advance the credit union movement by advocating, educating, uniting and supporting the interests of all credit unions statewide. To learn more about NYCUA, visit www.nycua.org. To find a credit union or learn more about the credit union movement, visit yourmoneyfurther.com.
