Virginia Battle Over Banks Buying CUs Gains Media Coverage
The legislative scrap brewing in Virginia over bills to permit banks to buy credit unions was capturing national attention this month from both industries, regulators and the media with issues now broadened to include mutual conversions and bank bailouts.
Key committee action in either the Virginia Senate or the Assembly was expected late last week as the Virginia Credit Union League continued to oppose the banker-written bills in their original form but agreeing to compromise language clarifying the status of state chartered institutions converting to mutuals.
CUNA, for one, said it was "watching very closely" the Virginia developments to gauge whether the Old Dominion might be a testing ground for a broader "contain and convert" strategy pursued by the American Bankers Association. An ABA spokesman insisted he knew of no effort to spread the bank buying CUs idea to other states.
Meanwhile, the Virginia league said it was hopeful its grassroots campaign, including a Jan. 28 Credit Union Day in Richmond and a 2,000 e-mail blitz to lawmakers, would help swing a favorable vote to defeat companion bills drafted by the Virginia Bankers Association and scheduled for first hearings in Senate and Assembly committees.
The bills, drawn up by the VBA last December and originally attacked by the league as seriously flawed and unworkable, would enable banks to buy CUs and allow CUs to purchase small community banks. The league charged that idea is a smokescreen for bankers coveting CU capital, branches and market share.
Another contentious issue has been how to treat member rights in a nonprofit to stock conversion.
Under the proposed bill, the league said, "there would be insufficient protection of member rights" due to lack of provisions for members equity, notice requirements or voting procedures, prohibition on director or executive enrichment and assurance credit union members would retain control of a merged CU.
Meanwhile, the bank-CU fight and complaints of banks bullying CUs were drawing interest from the Virginia media with one columnist characterizing the feud as "an old-fashioned, big-money, insider brawl" in which banks "navigating the rubble of a deep recession are attempting to hoover up the few dollars available in a tough credit market."
Citing the profit vs. nonprofit status of banks and CUs, Jeff Schapiro, a The Richmond Times Dispatch columnist, wrote in a Jan. 31 article that the battle comes down to "plutocrats versus the proletariat," as CUs "play a game of defense" against powerful banking interests.
In Washington, meanwhile, a CUNA spokesman praised Rick Pillow, president/CEO of the Virginia league and the league's leadership "for doing it right" in aggressively educating lawmakers and the media on stock vs. nonstock differences of CUs and banks.