League Readies for Next Fight in State-Level Field-of-Membership Case

New pre-hearing filings have been entered in the state-level field-of-membership case now before the State Corporation Commission (SCC). The case has a formal hearing date of Oct. 29, 2021.

Your League is a party to the case involving a field-of-membership expansion for the state-chartered Virginia Credit Union. The Virginia Bankers Association and a number of its member banks objected to Virginia Credit Union being granted permission to serve the Medical Society of Virginia, a 10,000-member association offering support and services to medical professionals across the Commonwealth. VBA and the banks party to the case asked the State Corporation Commission to revisit the FOM expansion approval made by the Bureau of Financial Institutions and Commissioner Joe Face Jr.

The new filings include testimony from Heidi Lewis, a now-retired manager for two small, Virginia-based credit unions; Bill Hampel, retired Chief Economist and Policy Officer for the Credit Union National Association; and League Chief Advocacy Officer David Miles.

“The field-of-membership approval by BFI and Commissioner Face was entirely appropriate in this case,” noted the League’s David Miles. “Virginia Credit Union and the League have worked to buttress our arguments with expert testimony and the real-world experience of small credit unions.”

“We remain committed to upholding the dual-chartering system and fending off banker attacks in whatever form they take,” noted Miles. “We recognize that a loss in this case poses a significant threat in that it would 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 grounded firmly in the principle of parity between the state and federal charters.”

Of additional concern is the fact 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.

Last July, parties to the case participated in a two-day hearing before an SCC hearing examiner, with the hearing featuring more than 10 hours of testimony and dozens of exhibits, including testimony from Miles and Virginia Credit Union staff.

In October 2020, the hearing examiner presiding over the case issued her findings, siding strongly with Virginia Credit Union, the League and BFI Commissioner Face.

Senior Hearing Examiner Ann Berkebile’s recommendation to the SCC judges was that they 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 its member banks.

But in January 2021, the State Corporation Commission remanded the case to a new hearing examiner for new proceedings, with the added requirement that Virginia Credit Union must prove its compliance with the applicable laws governing field-of-membership expansions.

Virginia Credit Union’s original application to add the Medical Society of Virginia to its field-of-membership was filed in 2018.

You can view case information here.