Victory in Trenton on the Joint Insurance Fund Investment Bill
in Political & Legislative
By: Chris Abeel, Vice President, Corporate & Governmental Affairs

Sometimes we measure progress in great leaps (Electronic Lien and Titling signed into law), and sometimes we measure it in inches. In this case, ensuring parity for New Jersey credit unions buried deep in the minutiae of pending legislation.

Both houses of the state Legislature are slated to vote tomorrow on legislation that liberalizes investments for the state’s 48 joint insurance funds, or JIFs. JIFs are self-insurance pools formed by groups of local government entities such as municipalities and school boards. Because they’re capitalized with taxpayer funds, they fall under the same investment rules as other local government agencies.

A provision in the legislation also liberalizes available investment vehicles for the state’s 566 municipalities, 611 school boards, and countless other local government authorities.

Buried among the various types of investments is language to permit what are called CDARS, short for Certificate of Deposit Account Registry Service. So what are CDARS?

CDARS are syndicated CDs that enable a financial institution to offer essentially unlimited FDIC coverage. In short, the CD is broken up into insurable amounts and then syndicated. The institution then receives syndicated deposits for the same amount. The customer receives a simple consolidated statement, as if they had an account with the one institution.

As originally introduced, the legislation allowed for the deposit of public funds into “multiple FDIC-insured accounts.” We were successful in obtaining an amendment that broadened that language to include federally-insured credit unions, not just FDIC-insured depositories.

From a global perspective, it’s not only good public policy, but, frankly, critical that NCUA’s Share Insurance Fund always be given parity with FDIC insurance.

More specifically, we’re focused on making sure that New Jersey credit unions have as many growth opportunities as possible.

Please let us know if you are pursuing CDARS with government entities as a growth strategy – we’d like to help once the legislation is signed into law.