2012%20Florida%20State%20Issues%20Agenda%20-%20FINAL

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League of Southeastern Credit Unions 2012 Florida State Issues Agenda Issue Public Deposits

Background The safeguarding of public funds is an essential and increasingly crucial function of state and local governments. A great variety of state and local governmental entities are charged with managing billions of dollars annually. Although the Federal Credit Union Act (FCUA) authorizes all federally-chartered credit unions to accept public deposits, Florida law does not grant state governmental entities the authority to deposit funds in federally-chartered and/or state-chartered credit unions. Currently, 33 states have some sort of public deposit authority for credit unions.

LSCU Position The LSCU will vigorously advocate for legislation that grants credit unions the ability to accept public deposits.

A key advantage to allowing credit unions this authority is that interest paid by credit unions on deposits, on average, continues to exceed interest paid by banks. In some states where public entities are not permitted to deposit public funds into credit unions, banks are taking advantage of the situation by paying no interest on public deposits. Expanding public deposit authority to credit unions would spur competition and lead to public entities earning more income on their decreasing deposits of public funds. HB 999 by Rep. Clay Ingram was filed and passed through one committee of reference last session. The companion measure, SB 1976 by Sen. Oscar Braynon, was not heard in committee. LSCU has commitments from Rep. Jason Brodeur (R-Sanford) and Sen. Chris Smith (D-West Palm Beach) to file the bill for 2012. Charter Conversion Strengthening

Preserving, protecting and promoting the credit union charter are fundamental to the role of the leagues and CUNA. Ensuring that credit union members are fully informed of the pros and cons of a proposed credit union to bank charter conversion is paramount to a fair and democratic process. The LSCU believes the credit union charter is the charter of choice for best serving consumers’ financial needs. Currently, Florida’s credit union to bank charter conversion statute leaves the door open for possible abuse. It is prudent to look at ways to strengthen the current statutory language, thus ensuring members are fully informed of both the advantages and disadvantages of a charter change.

The LSCU will advocate for legislation that strengthens consumer safeguards when a credit union is attempting to convert to a bank.

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