ALBANY, N.Y. – The state’s bankers took aim yesterday against the credit unions’ efforts to gain access to billions of dollars in municipal deposits across the state.
In a hearing before the state’s Joint Legislative Committee, Michael Smith, president of the New York Bankers Association, said the state’s savings and loans should finally be given access to municipal deposits, but not credit unions because of their federal tax exemption.
"Only firms that pay taxes should be allowed to accept taxpayer dollars from local government entities," said Mr. Smith. "Banks are major contributors to the fiscal health of New York State, New York City and other municipalities through the income, sales, mortgage recording and other taxes they pay. Last year alone, the State's banks and thrifts paid more than $1 billion in income taxes to New York State."
At the same hearing, Bill Mellin, president of the New York CU Association, told lawmakers the bill will give municipalities greater choice in placing their funds. "By embracing the concept of municipal depository choice, the governor has provided to the legislature a cost-effective means of maximizing the tax dollars of New Yorkers and providing local governments much needed flexibility as they seek to save resources," said Mellin.
While credit unions have tried for years to gain access to muni deposits, the stakes were raised last week when New York Mayor Michael Bloomberg promised to deposit $25 million into five city credit unions if the enabling legislation is approved.
Gov. David Patterson has endorsed the bill to allow municipalities to deposit funds in both credit unions and S&Ls.
