March 8, 2012
After moving through the Washington State Legislature with little opposition, Senate Bill 5913—known as the public funds bill—has now officially been signed into law. Gov. Christine Gregoire signed the bill yesterday afternoon, allowing public entities for the first time to deposit funds in any credit union in Washington up to the federal insurance maximum of $250,000.
The new law goes into effect on June 8—60 days after the end of the regular 2011 legislative session.
“We are very pleased to finally be able to close this chapter on an effort that started three years ago,” Northwest Credit Union Association (NWCUA) Vice President of Legislative Affairs Mark Minickiello said. “With the signing of this legislation, all Washington credit unions are now eligible to hold public funds up to the level of insurance—if they so choose. While some may not see this as having a large effect, it is one more step toward allowing not-for-profit credit unions to offer the products and services their members want. I’m very proud of all the efforts that went into this bill’s passage.”
State law previously allowed state-chartered credit unions to be depositaries up to a maximum of $100,000. The bill’s passage now allows federally-chartered credit unions to act as depositaries and raises the maximum to $250,000 for all credit unions.
A number of other states have recently pursued similar legislation. New Jersey enacted a law in 2011 allowing 1,500 local government entities, including libraries and community colleges, to deposit funds in credit unions, while the Florida legislature rejected a credit union public funds bill this year after being met with heavy bank opposition.
Ohio and Alabama have been the latest states to make a push, and hearings on the subject in the Ohio House are anticipated after legislators return from a recess next week. The Ohio Credit Union League has been instrumental in the legislation’s introduction and its education efforts and said that the movement now finds itself “in a war” against banks on issues such as supplemental capital and public funds.
In Alabama, the League of Southeastern Credit Unions has companion bills being reviewed by the House Financial Services Committee and the Senate Banking Committee and continues working with its members to advocate for the bill’s passage.
Questions? Contact a member of the Association’s Legislative Affairs team: