State-Level FOM Case Remanded to Hearing Examiner
The State Corporation Commission has remanded Virginia Credit Union’s field-of-membership case back to a hearing examiner for new proceedings -- in which the credit union will be required to prove compliance with the applicable laws governing field-of-membership expansions.
Your League is a party to this case. The hearing examiner has scheduled a pre-hearing conference for Jan. 28.
“While we’re disappointed with this development, we still expect to win,” notes League President Rick Pillow. “What frustrates us is that this already long journey for Virginia Credit Union and potential credit union members in the Medical Society of Virginia has now become that much longer. We remain deeply 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 grave concern for us as advocates of a dual-chartering system that encourages innovation and flexibility.”
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. Your League is 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.
In 2019, 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. We hoped for a speedy resolution in the case when last October the hearing examiner sided strongly with Virginia Credit Union and the League in recommending the Commission 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. You can view case information here.
“This decision by the State Corporation Commission for new proceedings was always a possibility,” notes League Senior Vice President David Miles, who testified in the court case last year, “and we’re fully prepared to move forward in support of our state-chartered credit unions. While this means bankers get another bite at the apple, our case remains strong. Based on the SCC judges’ decision, we’ll simply have to argue our case from a different angle.”
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