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LYNCHBURG, Va. – The Virginia Credit Union League has put credit unions on notice that the Virginia Bankers Association is “aggressively” lobbying for the review of credit unions’ tax exemption. According to the League, the VBA is calling credit unions’ tax exemption from federal corporate income taxes “a flawed public policy,” and claims credit unions are “exploiting these exemptions.” VCUL President/CEO Rick Pillow advised CUs to “prepare themselves for the possibility of a taxation bill. We have a solid, well-conceived plan in place to fight this, but credit unions need to be ready to do their part in reaching their state legislators. Rest assured that your League is closely monitoring the pre-filing of legislation in the General Assembly, is in constant contact with state legislators, and is ready to mobilize credit unions to battle this latest development, if necessary.” He did not disclose how the Virginia League learned about the VBA’s plans, but Lewis Wood, VCUL’s director of publications and public relations, said “we have it on good authority that the bankers have stepped up their efforts.” Wood added that Pillow wasn’t surprised when he learned about the VBA’s activities. “The Virginia Bankers Association has shown they’re more than willing to attack credit unions in the state,” he said. Pillow reassured CUs the Virginia League intends to continue to monitor the situation and will keep them apprised of any new developments. In addition, he alerted them to two studies the Virginia Bankers Association intends to officially release “in the near future” on the state’s credit union system. “We know for certain that legislators already received an advance copy of one of the studies, the one which we know was directly funded by the Virginia Bankers Association,” said Pillow. Although the Virginia League hasn’t yet seen a copy of that study, Wood says the League knows it is an update of a 1997 study done by two professors from the Virginia Commonwealth University that looked into credit unions’ growth and field-of-membership issues. When the 1997 study was released, the League commissioned its own study that Wood said “tore the other study apart by showing it had serious flaws.” Wood said the League hadn’t yet determined if it would commission another study of its own to address the updated study from the VBA. We want to wait and see it first and evaluate it before we determine what we’ll do, he said. Wood said he was aware that the VBA’s second study was written by a leading economist of a major local bank. “Be prepared. Bankers will likely work to make this a media issue, so be prepared for media inquiries,” he told credit unions. “Remember also that we have a field-of-membership case pending before the Virginia Supreme Court, which could lead to additional media interest.” Pillow was referring to the case concerning DuPont Community CU that the Virginia Supreme Court has agreed to hear an appeal from the VBA on concerning the decision by the state’s Bureau of Financial Institutions to allow DuPont CCU to expand its field-of-membership and add four counties – Rockingham, Rockbridge, Bath and Highland – and three cities – Harrisonburg, Lexington, and Buena Vista to its FOM that previously included the more than 97,000 residents of August County and the cities of Waynesboro and Staunton. The credit union’s resulting expanded FOM gives it a potential membership of 260,000 (CU Times, Aug. 6). The VBA’s appeal focuses on its assertion that the $363.4-million credit union’s FOM is too large to qualify as a `well-defined community.’ The Virginia League filed a brief with the Virginia Supreme Court on Oct. 3 on behalf of the BFI and DuPont Community CU in support of Commissioner Joe Face’s decision. The League, along with the credit union and the BFI, argued that the VBA lacked standing to bring the complaint. The BFI, which also filed its own brief, also asserted that by the state legislature including a clause “in its discretion” in the state Credit Union Act, it thereby gave the BFI broad authority to evaluate proposed FOM applications. Pillow urged all Virginia credit unions to complete Project Zip Code and Project Differentiation. “Now, more than ever, we need you to complete these two important projects,” he said. -

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