The law will expand access to financial services in underserved communities throughout the state.
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.
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.
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 (NYCUA continues to advocate for additional legislation that would expand credit union deposit access to the state and local governments.)
NYCUA President/CEO William J. Mellin said: “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. 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.”