Oregon is soon joining about half of the country in allowing cities and other public agencies to put large deposits in a credit union. The change is part of a recently passed state law and it goes into effect in April 2013.
It allows public agencies to have deposit accounts that exceed $250,000. James Sinks with the Oregon Treasury Department says this will offer more choices to those managing large deposit accounts held by public agencies.
Sinks spoke to 1110 KBND Wednesday morning.
"there were five government agencies who submitted letters the city of portland the city of corvallis - saying if the state were to allow it they would use credit unions and they would put in substantial funds- so clearly there's a demand to do that - and klamath falls on the east side of the state - they also said they wanted to use credit unions for their banking services."
Many states limit where public agencies can deposit public funds and in about half the state's legislatures have kept credit unions off of the list. So far in Oregon five Credit Unions have filed paperwork showing they would like to go through the process of being approved for higher public deposits.
"the idea is to create more options for government to choose to do their banking - there has been some requests from government to use credit unions."
This gives cities and other public agencies more options to save money on fees or in some cases get higher rates on their deposits.
To make sure the public dollars are safe even when a credit union goes under, the change sets up a special system using collateral. This backing is over and above the insurance on deposits to ensure that all the money would be returned to public deposit accounts in case the credit union fails.