Oregon Credit Union Public Funds Collateralization Program Launches

The new Oregon Credit Union Public Funds Collateralization Program launched Monday, allowing qualified credit unions in the state to accept public funds deposits that exceed federal insurance limits for the first time in history.

The program gives governments more options for depositing their funds, while still being assured their money is safe even in the event of a financial institution failure. Prior to Monday’s launch, only banks could accept public deposits beyond the $250,000 insurance limit.

The expanded program is the result of efforts by the Northwest Credit Union Association (NWCUA) and Oregon credit unions to establish a collateralization pool that will protect deposits above the $250,000 insurance level provided by the National Credit Union Administration (NCUA).  The credit unions will protect deposits higher than the insurance threshold by posting securities as collateral against any uninsured public funds balances. In the event of a loss, the state can recover public funds by selling the collateral. 

“It makes sense for local governments to move some of their money from Wall Street to Main Street,” said John Trull, NWCUA director of regulatory advocacy. “We are pleased to help facilitate the program.”

Trull congratulated ten credit unions for stepping up to establish the new collateralization pool. The credit unions are: Unitus Community, Pacific Crest Federal, OSU Federal, OnPoint Community, Advantis, MaPs, Northwest Community, Old West FCU, Wauna FCU and Oregon Community. Some of those credit unions had already accepted public funds deposits up to the insurance limit.

The cities of Beaverton, Corvallis, Independence, Klamath Falls and Portland have signed letters pledging to deposit funds in excess of $250,000 in one or more of the participating credit unions.

The amount of required collateral from each credit union will depend on their uninsured public funds balance, which must be reported to the State Treasury either weekly or monthly.  According to a news release issued by State Treasurer Ted Wheeler’s office, the minimum collateral requirement can range from 10 to 110 percent of uninsured public funds deposits, depending on the capitalization level of the individual credit union and the number of participating credit unions in the program.

“The state Treasury helps to keep Oregon’s money safe by protecting public funds that are deposited in private institutions,” said Wheeler. “I am pleased that credit unions have worked with Treasury to create the necessary safeguards, which allow them to also keep government deposits.”

 

Questions or comments? Contact Matt Halvorson, Anthem Editor: mhalvorson@nwcua.org.

Posted in Advocacy News, Federal.