NEWS: Recently, we alerted credit unions that a League-supported financial institution modernization bill had been signed into law. Our Courier had a long list of changes to various statutes, so you may have missed this news: Wisconsin’s Public Deposit Guarantee Fund now gives public depositors up to $1 million (increased from $400,000) in extra protection for losses. That’s above and beyond the NCUSIF’s deposit insurance coverage.
This change is significant, because some public depositors are limited in how much they can deposit, depending on coverage amounts. By increasing the state coverage available for losses if a financial institution fails, the new law gives public entities more incentive to deposit funds with credit unions and banks in Wisconsin.
As we explain in The League’s ii Release No. 0134:
- Public depositors (i.e., state and local government units and agencies) located in Wisconsin may be protected by the fund for deposits at state or federal financial institutions with a main or branch office located in Wisconsin.
- The Public Deposit Guarantee Fund is a “static” fund. That means the state will not replenish it if claims are made. Present funds, supplemented by interest earnings and reimbursements from the FDIC or NCUSIF, may be used to cover losses until the fund is exhausted.
- Claims against the fund are paid in the order in which satisfactory proofs of loss are received by the Division of Banking, at the Department of Financial Institutions. Thus, a public depositor has no firm assurance that the Public Deposit Guarantee Fund will be available at a future date when it may need to make a claim. For that reason, public depositors with questions about coverage eligibility or amounts should be advised to ask their attorney.
The change amended Wis. Stats. §34.08(2), effective March 22, 2024.