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Minn. bills would allow state deposits in CUs
ST. PAUL, Minn. (3/23/10)--The grassroots swell of efforts to "Move Your Money" to smaller, local institutions has reached the Minnesota Legislature, which is considering several bills that would direct more public institutions' deposits into credit unions and community banks. HF 3205, authored by Rep. Tim Mahoney (DLF-St. Paul), would give credit unions and local community banks a price advantage in bidding to win deposits from state agencies. He plans to add a requirement that banks and credit unions would need assets of $2.5 billion or less to qualify (Minneapolis/St. Paul Business Journal March 19). The bill would mandate that state agencies discount bids from small, local institutions by 10% to even the playing field with large institutions (Finance & Commerce Marcy 19). The Minnesota Credit Union Network (MnCUN) is supporting the measure. "Minnesota credit unions support the bill because they welcome opportunities to partner with the state," said Kristina Wright, vice president of communications at MnCUN. "They are eager to work with legislators to investigate additional ways that more Minnesota financial institutions can have the opportunity to hold public funds," she told News Now. Mahoney also is proposing a resolution expressing the House's support for small community banks and credit unions, and creating a study to determine the benefits of directing public deposits to those institutions, said Finance & Commerce. Credit unions and community banks already hold 268 of the state's 397 small accounts, ranging in size from $5,000 to $50,000 from state parks, correctional facilities and deputy registrars. Local branches of Minneapolis-based U.S. Bancorp and San Francisco-based Wells Fargo & Co. have the rest, said the Business Journal. Small financial institutions in Minnesota are seeing some of the effects from the Move Your Money movement started by the Huffington Post, which advocated moving money out of large banks to local institutions because of behavior that led to the banking crisis. "We're seeing that movement gaining traction here, especially among young people, which has been a demographic that we've had a hard time reaching," Mark Cummins, MnCUN president/CEO, told Finance and Commerce. Credit unions saw a 10% increase in deposits and a $1 billion increase in loans to consumers and small businesses. Kyle Markland, CEO of St. Paul-based Affinity Plus FCU said new members are looking for relief from broad, complex menu of fees and penalties on deposit accounts and credit cards that are a major revenue source at big retail banks. They also are looking for more reliable lenders, he told the publication.
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