Free market, corporate welfare, winners and losers.
These phrases are uttered every day in the halls of the Florida Capitol while lawmakers are in Session; but, the reality is, government is, across many sectors of society, still in the business of picking winners and losers.
One such instance where government picks winners and losers is in the fight between banks and credit unions over public deposits. For years, the credit unions have been seeking legislation that would allow them to accept deposits from public entities, like local governments and universities – just like for-profit banks already do.
Yet the powers that be in the Legislature, have kept that from happening. This year, though, lawmakers have a real shot at as we’ve heard so many times before, by getting out of the business of “picking winners and losers” in this industry space and allowing the free market to work.
Florida law currently bars credit unions from public deposits, and changing that has been a longtime priority of the League of Southeastern Credit Unions, an issue once again facing legislators in the current Session. SB 1170, known as the Florida Security for Public Deposits Act, would allow credit unions to accept public deposits. The bill is scheduled to be heard Tuesday by the Senate Banking and Insurance Committee.
According to a 2013 report by Luis Dopico and William Jackson of the University of Alabama: “It’s good policy to allow credit unions to accept public deposits, because it increases choice in the marketplace, provides greater competition, and in many cases provides better convenience for trustees of the public’s money.”
Researchers found that the benefits of allowing public entities to deposit funds in credit unions go beyond better interest rates.
“For instance,” Dopico and Jackson write, “there are many very small communities in the United States without a commercial bank but where a credit union is present. Since many of these communities are also low-income areas with special economic challenges, much of the cost of the inefficient public policy of restricting credit unions from participating in the public deposit market falls on those least able to afford it.”
It is not that I am advocating credit unions over for-profit banks; but, this move would allow lawmakers to stick to their principles and remove a protectionist statute from the books and really let consumers, in this case, taxpayer-funded public entities, pick where they want to bank.
It’s free market public policy at its best – now let’s see what lawmakers choose to do.