BOSTON (8/6/12)--Among the 31 bills sent to Massachusetts Gov. Deval Patrick last Monday and Tuesday was H 2073, a bill establishing a reserve fund for credit unions.
The state bill, sponsored by Rep. James M. Murphy (D-Weymouth), was filed by the Massachusetts Credit Union Share Insurance Corp. (MSIC), which has provided excess insurance to some state and federally chartered credit unions in the state since 1961. H 2073 would allow MSIC to form a voluntary liquidity fund for its member credit unions.
The fine-tuning bill states the corporation "may establish a separate and distinct fund to be known as the Reserve Fund for the purpose of promoting liquidity and elasticity and flexibility of the resources of its members. The Reserve Fund shall be funded with term and regular deposits voluntarily made by regular members and excess members. No member shall have on deposit more than 10% of its assets in the Reserve Fund."
Once the fund attains a $30 million total asset basis, deposits of any one member shall not exceed 10% of all deposits in the fund. No member may borrow from the fund in excess of 10% of its assets unless the loan is secured by the directors of the corporation.
MSIC used to be the primary deposit insurance for state-chartered credit unions but has carved a niche in excess coverage, according to the Massachusetts Credit Union League.
According to MSIC's website, it insures excess shares and deposits above the federal insurance limit of $250,000 at its member credit unions.
The governor has until Friday to sign, veto or seek amendments to the bills sent to his office last Tuesday, which was the final day for formal legislative sessions in 2012, according to the Boston Herald (Aug. 1). The state House and Senate will meet twice a week for the rest of the year in informal sessions where bills need unanimous support to advance.