COLUMBIA, Md. -
As a result of the treasurer's ruling, at least one credit union has lost an account in excess of $100,000 and residents in area towns are being notified by local officials that credit unions can no longer accept their property tax payments.
It all began when Allegany County finance director recently asked for and received a legal opinion from the state treasurer on whether using credit unions is permissible and was told they are not.
"The Maryland law that's involved here actually prohibits counties and municipalities from making deposits in anything other than approved financial institutions," said Michael Beall, CEO of the MDDCCUA.
And unfortunately, Beall said, credit unions are not on that list of approved financial institutions in the state of Maryland.
"So it's not some issue with the Credit Union Act of Maryland, but in the powers of the municipalities actually," Beall said.
"It is something we looked at a couple of years ago, and we are going to have a conversation with the [Maryland Gov. Martin] O'Malley administration about perhaps rectifying this, and also with the trade association for municipalities in the counties in the state and look forward to perhaps having credit unions be able to play a roll in being a partner for those municipalities," he added.
Beall said that there are not any credit unions impacted by this ruling because credit unions have never been on the list of approved financial institutions in the first place.
"There aren't credit consumers that are harmed at this point," he said. "And there aren't credit unions that harmed by this."
Beall also said that he has not seen any demands from credit unions to change this ruling, but the association feels that credit unions should at least be on the list of approved financial institutions.
Patricia Folk, CEO of the Allegany County Teachers Federal Credit Union, agreed, telling the Credit Union Journal that they are not impacted by this because it is not something they have done anyway.
But one Maryland credit union said that it is impacted by the ruling.
"Early in the year we lost a large account-that was county government had to remove over $100,000 because they were not allowed to put money in a credit union that was not insured by FDICA," said Michael Wright, CEO of the Potomac Federal Credit Union in Cumberland, Md. "It's not that we can't take the tax bill. It's the fact that the county and state municipalities are not allowed to have money stored in credit unions because they are not insured by the FDICA."
At least two CUs serve this rural area in far western Maryland, but bank branches are sparsely located. County officials said it will take an act by the Maryland legislature to change the law.
