Washington Credit Unions See Big Win with Passage of Unlimited Public Deposits Bill
Three leaders weigh in on what the bill’s passage means and the power of collective credit union advocacy.
During the Washington 2021 legislative session that ends this week, lawmakers voted in favor of Senate Bill 5106, which will allow credit unions to accept unlimited public deposits statewide. The bill was signed into law by Governor Jay Inslee on Friday and is expected to take effect July 25.
The bill’s passage is a big win for Washington credit unions and was made possible by the dedicated engagement of many credit union advocates. The law, to go into effect later this summer, ensures that municipalities in Clark, King, Pierce, Snohomish, and Spokane counties — home to two-thirds of the state’s population — can deposit more than $250,000 in an approved credit union. Previously, Washington law allowed municipalities to deposit unlimited public funds in credit unions in 34 of the state’s 39 counties. The new law will give local governments in every county options to deposit public funds in credit unions. NWCUA’s team and Northwest credit union advocates developed a broad coalition of support from a range of municipal representatives, resulting in the bill being passed.
“Credit unions of all sizes and from all areas of the state played a collective role in explaining to our legislators why this policy was important and also timely during a pandemic-focused virtual legislative session,” said Joe Adamack, VP of Legislative Affairs for Washington. “Like credit unions, local municipalities best know the needs of their community and by their structure, exist to be responsive to the needs of their community. By working with a credit union, local municipalities can earn better returns and pursue innovative partnerships that help everyone succeed.”
Lynn Ciani, Numerica Credit Union Chief Risk Officer; Ezra Eckhardt, President and CEO of STCU; and Barney Herrera, VP of Strategic Partnerships at Seattle Credit Union, were strong advocates for the bill, as was Debie Keesee, President and CEO of Spokane Media Federal Credit Union, who was an early champion of it.
“In larger counties there are small public entities that have banking needs that are well suited to be met by credit unions. Numerica, for example, is committed to furthering building our communities by supporting education, but was unable to provide excellent deposit services to those entities and could only meet their lending needs,” said Ciani, who chaired the 2020 Washington State Issues Working Group.
In eastern Washington, Eckhardt said the bill’s passage will open up new partnerships between municipalities and community partners.
“In Medical Lake, Ritzville, and other communities, the only option for public funds management has been large, out-of-market money center banks,” said Eckhardt, who also co-chairs the Washington Governmental Affairs Committee. “This new law puts Washington credit unions on a level playing field to help support the needs of our communities.”
For Seattle Credit Union, access to loans at an affordable, equitable rate is one of the largest challenges the community faces, Herrera said.
“This law will allow us to work with municipalities in order to keep local tax dollars local and allow us as a credit union to center the voice of the community in our products and services.”
Ciani and Eckhardt echoed Herrera’s thoughts, reinforcing how the bill will strengthen local communities.
“Numerica supports small public entities by making loans, however, the deposits of those public entities are sometimes deposited in national banks who invest those funds throughout the United States,” Ciani explained. “By allowing those public entities to partner with local credit unions, those funds can be used for loans to individuals and small businesses in our communities resulting in a strengthened and prosperous region.”
In Spokane County, there’s currently a pool of approximately $100 million in public funds. But because of public fund deposit limitations, “it was very difficult for Spokane County to have any meaningful relationship with credit unions,” Eckhardt said. “This new law will help keep local tax dollars in the market and will allow credit unions to directly contribute back to the community with in-market lending. It also opens the door for credit unions to develop strong partnerships with the municipalities where we work and live. We can actively collaborate with the municipalities to help create better outcomes for our members.”
Collective, organized credit union advocacy made the bill’s passage possible, along with strong support from prime sponsor Sen. Marko Liias (D-Lynnwood) and co-sponsor Sen. Ann Rivers (R-La Center). Rep. Steve Kirby (D-Tacoma) and Larry Hoff (R-Vancouver) shepherded the bill through the House, which advanced quickly thanks to strong support from the House Democratic Caucus and Speaker Laurie Jinkins (D-Tacoma).
“Legislative advocacy allows us to speak up to the policy makers and inform them on what policies are out of date and hindering our ability to serve the community, while increasing our capacity to achieve the greatest good for the most people and communities that we serve,” Herrera said.
Credit unions must remain flexible and able to respond to changing laws and regulations, Ciani stressed.
“Change is constant and the laws governing credit unions need to keep pace with that change so the needs of our membership can be met in our communities. Explaining that need to our legislature is necessary so that they can understand how the proposed legislation helps our members, our communities, and their constituents.”
Legislators look to credit unions to provide expert guidance on community financial needs, and credit unions are uniquely positioned to advocate collectively, Eckhardt said.
“Credit unions have a strong voice when we work together on key legislative topics. Our legislators count on us to reflect the needs of people in their districts. We have the ability to speak objectively and factually on topics that will improve outcomes for our communities.”
For more information about the bill, contact VP of Washington Legislative Affairs, Joe Adamack.