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HD 2979

An Act to allow municipalities to deposit in credit unions

194th Legislature (2025-2026) Introduced by Shirley Arriaga

Massachusetts bill permits municipalities to deposit public funds in credit unions, currently allowed only in banks and select other institutions.

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WeVote Research Nonpartisan
Bill Summary · HD 2979

Legislative bill overview

HD 2979 allows Massachusetts municipalities to deposit public funds in credit unions, expanding the types of financial institutions where municipal money can be held beyond traditional banks. Currently, state law restricts municipal deposits to banks and certain other financial institutions, explicitly excluding credit unions. This bill removes that restriction.

Why is this important

Municipalities manage substantial public funds (tax revenue, bond proceeds, grant money) and need safe places to deposit them while earning returns. Allowing credit union deposits could provide towns with additional options that may offer competitive rates, lower fees, or support community-focused institutions. However, the change also introduces questions about deposit insurance coverage and financial stability oversight for public funds.

Potential points of contention

  • Deposit insurance limits: Credit unions are insured by NCUA up to $250,000 per account, while banks have similar FDIC coverage. Municipalities with large fund balances may exceed these limits, creating exposure for uninsured portions.
  • Financial stability concerns: Credit unions vary widely in size and financial health. Some advocates worry municipalities could inadvertently deposit public money in weaker institutions without adequate regulatory scrutiny.
  • Competitive impacts: Some banking interests may oppose losing municipal deposit business to credit unions, potentially arguing banks provide more robust services and oversight for government accounts.

Compiled from official sources — confirm details with the bill’s official record.

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