ALBANY, N.Y. – Gov. Andrew Cuomo has signed into law legislation that will allow credit unions to participate in the state’s Banking Development District Program.
As CUToday.info reported in June, the legislation passed both houses of the legislature and had strong support from the New York Credit Union Association.
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, noted the New York CU Association. “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,” the NYCUA added.
Institutions that are approved for a BDD designation are eligible to receive up to $10 million in subsidized public deposits and other benefits, including below market-rate deposits from New York state. These deposits are intended to lower the financial risk that the branch may incur when opening in an underserved community, usually comprised of low- and moderate-income households.
Notably, the legislation will mark the first time in state history that credit unions will be permitted to receive public deposits, said the NYCUA, which added it continues to advocate for additional legislation that would expand credit union deposit access to the state and local governments.
“Passage of this law is a major victory for credit unions and a major victory for New Yorkers – especially those who reside in underserved and under-banked areas,” said NYCUA President/CEO William J. Mellin said. “Gov. Andrew Cuomo should be commended for continuing to strengthen the New York credit union movement. With this new law, more New Yorkers will have critical access to the credit union and financial system. On behalf of the New York credit union community, I’d like to thank the governor, as well as Sen. Montgomery and Assemblyman Zebrowski for their leadership.”