State-Level FOM Case Gets October Hearing Date

An important field-of-membership case being argued before the State Corporation Commission (SCC) now has a formal hearing date of Oct. 29, 2021.

Virginia Credit Union was approved by the Bureau of Financial Institutions (BFI) to add the Medical Society of Virginia to its field-of-membership in July 2019, prompting the Virginia Bankers Association and seven of its member banks to file a petition asking the SCC judges to consider whether or not BFI’s decision was appropriate.

The SCC judges have the final say in matters overseen by the SCC’s various divisions, including decisions made by BFI, though it’s been extremely rare for credit union field-of-membership cases to be heard by the judges.

As background, the Medical Society of Virginia is a 10,000-member association offering support and services to medical professionals across the Commonwealth. Virginia Credit Union’s original application to add the Medical Society of Virginia to its field-of-membership was filed in 2018.

This same case was argued before an SCC hearing examiner last July, with Virginia Credit Union and your League offering extensive testimony in the case which stretched more than 10 hours over the course of two days. In October 2020, the hearing examiner presiding over the case issued her findings, siding strongly with Virginia Credit Union, the League and BFI Commissioner Joe 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.

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.

League President Rick Pillow and Senior Vice President David Miles, who provided testimony on behalf of the League in last July’s proceedings, expressed disappointment with the SCC judges’ decision while noting that the testimony, evidence and arguments presented by Virginia Credit Union, the League and the Medical Society of Virginia would serve just as well in any new proceedings. Both noted the added hurdle of proving the credit union’s compliance field-of-membership laws had already been addressed to some degree in the testimony and evidence offered by Virginia Credit Union and BFI Commissioner Joe Face.

“This decision by the State Corporation Commission for new proceedings was always a possibility,” noted Miles, “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.”

Bankers have recently engaged in state-level legislative and judicial attacks – whether field-of-membership or taxation -- in hopes of building momentum for carrying these issues to the federal level, meaning 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.

You can view case information here.