BEAVERTON, Ore. (4/9/13)--Oregon credit unions last week launched a new Credit Union Public Funds Collateralization Program that will allow qualified credit unions in the state to accept public funds deposits exceeding federal insurance limits for the first time in history, said the Northwest Credit Union Association.
NWCUA and Oregon credit unions worked to establish a collateralization pool that will protect deposits above the $250,000 insurance level provided by the National Credit Union Administration (Anthem Recap April 5).
Credit unions in the program will protect higher deposits by posting securities as collateral against any uninsured public funds balances. If there's a loss, the state can recover public funds by selling the collateral, said NWCUA.
"It makes sense for local governments to move some of their money from Wall Street to Main Street," said John Trull, NWCUA director of regulatory advocacy, in the article.
Ten credit unions established the collateralization pool. They are:
Some had already accepted public funds deposits up to the insurance limit, said NWCUA.
Five cities--Beaverton, Corvallis, Independence, Klamath Falls and Portland-- have signed letters pledging to deposit funds in excess of $250,000 in one or more of the credit unions.
The amount each credit union must use as collateral will depend on its uninsured public funds balance, which it must report either weekly or monthly to the State Treasury. State Treasurer Ted Wheeler's office has said the minimum collateral requirement can range from 10% to 110% of uninsured public funds deposits, depending on the credit union's capitalization level and the number of credit unions participating in the program.