BOSTON (4/21/14)--The Massachusetts Joint Committee on Financial Services hosted a public hearing last week to discuss a bill that could open the door for state- and federally chartered credit unions to become public funds depositories (Daily CU Scan April 17).
Sen. Michael Rodrigues, who has sponsored S.B. 479, or An Act Relative to Public Funds, made remarks during the session about how the legislation would benefit public agencies.
Specifically, Rodrigues (D-Westport) said the law would allow "for flexibility in depository arrangements of public funds and encourage competition for funds, thus driving better rates of return on public monies optimizing economic benefits for citizens."
Massachusetts Credit Union League President Paul Gentile offered both written and oral testimony to support the legislation during the hearing.
Gentile emphasized that because of the close relationships credit unions have with their communities, local public officials often approach them seeking an alternative to deposit public funds.
Deposits made in credit unions are also made in locally owned and governed cooperatives, Gentile said. And those cooperatives are headquartered and make loans in the communities where they reside.
About 50% of Massachusetts bank deposits are made in banks outside of the state, the league president added. Meanwhile, more than 30 state legislatures have approved laws that permit credit unions to act as public depositories, including nearby Maine and Rhode Island.