GOVERNOR CUOMO SIGNS IMPORTANT CREDIT UNION BANKING DEVELOPMENT BILL

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.

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