Round 2 for Critical State-Level FOM Case Begins CONTACT: Lewis Wood Vice President, Public Relations & Communication 800.768.3344, ext. 629 lwood@vacul.org The case before the State Corporation Commission involving Virginia Credit Union’s application to add a group of medical professionals to its field-of-membership entered its next phase yesterday with a pre-hearing conference of all the parties, including your League. In a decision earlier this month, the State Corporation Commission remanded the case back to a hearing examiner for new proceedings -- in which Virginia Credit Union will be required to prove compliance with the applicable laws governing field-of-membership expansions, while also facing a new regulatory hurdle. “We continue this fight to protect the viability of the dual-chartering system and parity,” noted League Senior Vice President David Miles, who testified in the court case last year. “While it’s unfortunate this case will likely stretch through 2021, we are nonetheless well-prepared to make our case. These are new proceedings before a new hearing examiner, but evidence and testimony introduced previously can be re-introduced in these new proceedings.” Miles noted that shifting the burden of proof to Virginia Credit Union presents a new challenge, but it is not an insurmountable one. “We still expect to win this case,” said Miles, “but we’ll need to approach it from a different angle.” 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 its member banks. You can view case information here. This case is significant for all credit unions because 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. Your League has legitimate concerns that a win for bankers at the state level could have repercussions at the federal level. In shifting the burden of proof to Virginia Credit Union, the State Corporation is seemingly questioning the authority it has previously invested in the Commissioner of the Bureau of Financial Institutions, who generally is given leeway in ruling on field-of-membership expansions with more than 3,000 potential members provided all applicable law is followed and there is sufficient evidence to support the application. Essentially, the Commission is asking state-chartered, multiple-common-bond credit unions seeking to add a group with more than 3,000 potential members to prove the group could not form its own credit union. We view this as an unnecessary burden, one which, to our knowledge, is not required by any other state credit union regulator – and certainly not the National Credit Union Administration. Should this new burden of proof become the regulatory expectation for Virginia’s state-chartered credit unions, it almost certainly would have a chilling effect on field-of-membership expansions for Virginia’s state-chartered, multiple-common-bond credit unions.
