SCC Hearing Next Week for Hugely Significant CU Field-of-Membership Case

Virginia Credit Union and your League will be back before the State Corporation Commission next week for the latest formal hearing in a now years-long field-of-membership case. The proceedings are set to begin on Wednesday. If arguments remain end of day Wednesday, the hearing will reconvene on Friday.

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 in July 2020, 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 Senior Vice President David Miles notes that testimony, evidence and arguments previously presented by Virginia Credit Union, the League and the Medical Society of Virginia will be reintroduced in these new proceedings. Additional testimony will also be considered including that of credit union expert Bill Hampel (formerly Chief Economist CUNA) and banking proponent Keith Leggett (formerly ABA).

Miles notes that the latest filings from the bankers moved to exclude significant portions of pre-filed testimony from Virginia Credit Union, the League and our witnesses. In a ruling filed today (Oct. 19), Chief Hearing Examiner Alexander Skirpan denied the bankers' various motions.

"Bankers have zeroed in on the semantics of the regulation and argue that the Medical Society could form its own credit union," says Miles. "We maintain that the field-of-membership regulations, of necessity, provide BFI appropriate and reasonable leeway in determining whether the formation of a de novo credit union makes sense in terms of practicability and reasonableness related to safety and soundness standards, or if it's more appropriate to allow an existing credit union to expand its field-of-membership by taking in a given group. The Commission has the authority, information and expertise to make that determination."

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.

You can view case information here.