CUs See Important Win in FOM Case Before State Corporation Commission
SCC Judges Handed Case; Bankers Still Have Option to Appeal Case to State Supreme Court
Virginia’s credit union system scored a significant win yesterday when the State Corporation Commission hearing examiner presiding over an important field-of-membership case sided strongly with Virginia Credit Union and the League.
Senior Hearing Examiner Ann Berkebile’s recommendation to the SCC judges, who must now render a ruling in the case, asks the judges to adopt her report, uphold the Bureau of Financial Institutions’ decision to allow Virginia Credit Union to add the Medical Society of Virginia to its field-of-membership, and dismiss the case brought by the Virginia Bankers Association and several of its member banks.
Last year, the state Bureau of Financial Institutions approved a field-of-membership expansion for Virginia Credit Union to serve the Medical Society of Virginia, a 10,000-member association offering support and services to medical professionals across the Commonwealth.
The Virginia Bankers Association and several of its member banks objected, petitioning the State Corporation Commission to rehear and reconsider the decision of the Bureau of Financial Institutions to allow Virginia Credit Union to serve the group. The Commission granted the bankers' request to stay the expansion decision.
A two-day hearing was held in July 2020, with more than 10 hours of arguments and testimony. Your League is a party to the case. You can view case information here.
Virginia Credit Union’s original petition to add the Medical Society of Virginia to its field-of-membership was filed in 2018.
“While the long journey for this case is not over, this is an important win for credit unions,” noted Virginia Credit Union League President Rick Pillow. “The hearing examiner’s report found that BFI Commissioner Joe Face’s decision to grant Virginia Credit Union’s field-of-membership expansion was supported by credible evidence when it was issued and is consistent with the law. What’s more, the hearing examiner shot down other key arguments bankers made in the case, specifically the alleged harm to banks resulting from the FOM expansion and the Medical Society of Virginia’s ability to form a de novo credit union.”
An unfavorable decision by the State Corporation Commission judges would leave bankers with another option, however. They can appeal the case to the state Supreme Court, as they did in an important community charter case involving DuPont Community Credit Union in 2002.
“Recently, we’ve seen bankers engaging in state-level attacks – whether field-of-membership or taxation -- in hopes of building momentum for carrying these issues to the federal level. We’re doing all we can to ensure they don’t win here, but this case bears every credit union’s close attention.”
Importantly, the laws granting authority to regulators to approve common-bond expansions for groups with more than 3,000 potential members in Virginia and at the federal level are very similar in both wording and intent, so your League has legitimate concerns that a win for bankers at the state level could have repercussions at the federal level.
Your League is also concerned an unfavorable decision in this case would establish a precedent that might well have a chilling effect on state-chartered, multiple-common-bond credit unions’ pursuit of charter expansions. It would also weaken the state charter, a concern for us as advocates of a dual-chartering system that encourages innovation and flexibility.
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