An Act to allow municipalities to deposit into credit unions

194th Legislature (2025-2026) Introduced by Adam Gómez

Allows Massachusetts municipalities to deposit public funds in credit unions (including federal credit unions) with a 25% cap per institution.

House concurred

Purpose and intent

Modernize and expand the list of eligible depositories for municipal public funds by explicitly allowing Massachusetts municipalities to deposit public funds into credit unions (state and federal) doing business in the Commonwealth.

Align treatment of credit unions with existing provisions that already permit deposits with federal savings banks and cooperative banks, thereby broadening access to public funds for credit unions.

Key provisions (what the bill would change)

Section 34, Chapter 29

Adds federal credit unions to the list of permissible institutions alongside federal savings banks.
Expands authorization to include credit unions in the existing framework governing public deposits.

Section 34, Chapter 29 (second amendment)

Adds “credit unions” to the list that previously included cooperative banks.

Sections 54, 55, and 55A, Chapter 44

Authorizes deposits of public funds in credit unions or federal credit unions, including deposits in paid-up shares, as applicable.
Incorporates credit unions into the statutory framework governing deposits and investments of public funds.

Section 29, Chapter 171

Grants credit unions (including federal credit unions) the ability to accept public funds under the referenced statutes, with a cap: the total public funds held by any such credit union may not exceed 25% of its assets at any time.

Affected parties

Municipalities and their treasurers or other public funds custodians (cities, towns, and their financial officers).

Credit unions and federally chartered credit unions operating in Massachusetts.

Traditional banks and cooperative banks, which may face broader competition for public deposits and must comply with the new deposit rules.

Procedural and timeline aspects

Introduced: February 27, 2025.

Legislative actions: Referred to the Committee on Financial Services on February 27, 2025; status shows House concurred.

The “House concurred” status indicates the House has concurred with Senate amendments, moving the bill toward final approval and potential enactment, subject to the Governor’s signature or override processes as applicable.

Potential impact and considerations

Public funds diversification: Municipalities gain an additional, potentially local option for safekeeping and earning on public funds through credit unions.

Safety and risk controls: The 25% cap on public funds held by any single credit union serves as a risk management measure, limiting exposure.

Access and competition: Credit unions gain greater access to municipal funds, which could influence liquidity diversification and credit union growth, while banks may face increased competition for deposits.

Compliance and oversight: Municipalities and depositing institutions must ensure compliance with the amended sections and any applicable regulatory requirements for public funds handling.

This bill, if enacted, would broaden permissible public-deposit institutions to include credit unions and federal credit unions, with safeguards to limit concentration of public funds.

Bill