METAIRIE, La.–In what is being described as the “largest deposit in the 82 years since credit unions were brought under federal control,” Jefferson Financial CU received $5 million after it passed through a network of credit unions in $250,000 increments before being consolidated into a single, fully-insured account at JFCU.
The transaction marked the first time a credit union has utilized so-called "pass-through insurance" on a deposit greater than $250,000, which is the limit for federal insurance on deposits, according to The Advocate.
Jefferson Financial CEO Mark Rosa told The Advocate CUs have not participated in such networked deposits because most are unfamiliar with the mechanism. Indeed, Rosa told The Advocate he only became aware of it after a chance meeting with a state financial regulator about a year ago.
Having the ability to handle larger deposits will be beneficial for the CU, Rosa told The Advocate. He said the process took time to complete as it involved interpreting the regulation, vetting it with lawyers and regulators, and working out logistics.
"We didn't have to create a law, we don't have to beg, we don't have to do anything special," Rosa told the Advocate. "It's been sitting here; it was hiding in plain sight since the '30s. Not a single credit union has taken advantage of it, and goodness knows we need it."
The maximum deposit that a credit union could handle would be $250,000 multiplied by the number of CUs in its network — a figure that Rosa told The Advocate could reach as much as $70 million.