DFS approves school banking changes for state-chartered CUs

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The state Department of Financial Services has finalized changes that eases restrictions on in-school banking programs for state-chartered credit unions. The move, which the New York Credit Union Association strongly supports, authorizes credit unions with student branches to retain students’ memberships after they are no longer enrolled at the school.

The move creates parity with federal credit unions and is in line with the widely recognized notion, “once a member, always a member.”

The DFS action also permits faculty and staff of the school where the branch is located to become members of the credit union.

Association President/CEO William J. Mellin said:

We strongly support this reasonable decision by the Department of Financial Services to create parity between New York-chartered and federally chartered credit unions. Student banking helps both students and faculty develop sound financial habits, and it is totally in line with the credit union mission and philosophy. However, the previous rules were so onerous that state-chartered credit unions were essentially unable to facilitate a school banking program. This action by the DFS changes that.

Under Superintendent Vullo’s leadership, the DFS has shown a real willingness to work with the state’s credit unions to address these kinds of disparities. We commend her and the department for continually working to improve the state charter and making New York a more competitive place for credit unions to do business.

In October, Mellin penned a comment letter to the DFS, urging the department to use its powers under the state “wildcard” law to finalize the order. In that letter, he explained that the state’s “framework for student branching by state-chartered financial institutions protects the public interest and is necessary to achieve parity between state and federally-chartered credit unions…”

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