League Continues to Monitor Key Bills As General Assembly Approaches Crossover Day
CU Legislation Has Passed Both Houses
The General Assembly is nearing its important Crossover deadline (Feb. 11), in which the House and Senate will begin debating bills passed by the other chamber. The session has proved especially busy as we've fought for credit union legislation and monitored a slew of legislative measures championed by Democrats, who now control both houses of the legislature and the executive branch.
Here is an overview of the key bills monitored by your League.
Credit union director/officials compensation: The League-initiated bills to allow state-chartered credit unions to compensate their directors passed the House and Senate -- subject to an annual cap of $6,000 per official. The authority is permissive and will be governed by credit union board policy consistent with regulatory provisions for safety and soundness (the policy must be fiscally responsible). The bills should again pass in the Senate and House post-Crossover given the uncontested nature.
Public Deposits: The bill to enable credit unions to act as an authorized depository for public entities was carried over to 2021. While we didn’t seek the introduction of a public deposits measure this year, we agree with bill patron Del. Lee Carter that public deposits authority for credit unions is good public policy. We believe that providing local government with another choice for financial services can only benefit taxpayers and local government agencies. It was our request to carry over the bill, coupled with fact a mandated budgetary impact study was not completed, that led to the action to postpone consideration. The Governor’s budget bill does include a provision for the Department of Treasury to develop a pilot program for credit unions’ acceptance of public deposits. We worked with the Governor’s office to get this included in the draft of the state budget -- a victory in itself -- but the odds are long for final passage.
Small-dollar loans/open-end lending: A significant number of bills were filed related to "predatory" lending. The bills were aimed at internet lenders charging usury rates, car title lenders and payday loan lenders. Traditional finance companies were included in the bills due to their history in serving the small loan market. Initially some of the bills infringed upon the open-end lending statutes for credit unions and banks. We have been successful in exempting credit unions from any legislation advanced thus far through the committee process. This was necessary to protect our current practices with payday alternative loans and even credit card cash advances.
Privacy legislation: This year, a number of state legislatures, including Virginia, are considering data privacy bills along the lines of California’s recently enacted laws. Our position has been that federal standards are the preferred method to address data privacy given that a patchwork of differing state laws creates compliance challenges. The most comprehensive data privacy bill has been carried over to 2021 to give stakeholders (including credit unions) more time to work on the issue.
Mandated reporting for suspected financial exploitation: SB391, which has now passed the Senate, was amended, resulting in a much better bill for financial institutions. Financial institutions have been removed from the listing of mandatory reporters -- which was required in the original bill. One important caveat: if financial institutions refuse a transaction pursuant to the intent and protections of the statute (i.e. the credit union employee is suspicious of financial exploitation and therefore will not process the payment order), the institution must then report the refusal of that transaction to the appropriate department of social services within 5 days. In practice, civil penalties will not be an issue in that the standard for such is set at gross negligence. We believe this is a winning compromise given:
- There is no mandatory reporting requirement for ordinary transactions.
- Mandatory reporting only occurs if you choose to deny or delay a payment order based upon your suspicion of abuse. The timeline for reporting has been extended to 5 days.
- Civil penalties are off the table with the exception of gross negligence.
We were successful in stalling the legislation long enough to bring the stakeholders to the table to craft this workable compromise. Now that the Senate has passed the measure, we'll monitor its progress once the House takes up the bill.
Other key bills we've worked on this session include:
Power of Attorney: The bill would have imposed additional and problematic requirements on financial institutions under order of any attorney-in-fact. The bill was withdrawn by the patron.
Reimbursement for complying with court subpoena: We support this legislation, which enables financial institutions to be reimbursed for their costs in such instances. The bill passed one committee but has been referred to another for subsequent action.
We are closely monitoring about 50 other bills that could impact credit union operations.
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