For the time being, credit union concerns in Virginia and elsewhere over companion bills in the state Senate and House enabling banks to buy and merge credit unions have eased following committee action leading to likely passage.
On a 15-0 vote, the Virginia Senate Commerce and Labor Committee recast the House-endorsed bills drafted by the Virginia Bankers Association into compromise measures clearing the way for state-chartered CUs to convert to mutual status should they choose that route.
Still, industry sources said the fear of a banker-led "contain and convert" strategy remained a prime worry within the Virginia Credit Union League as officials privately called the original VBA bill a first step toward a broader campaign next year. Or, said the sources, a testing of the waters by the American Bankers Association for other states.
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The compromise Senate measure, worked out in meetings between the Virginia League and the Virginia Bankers Association, was adopted Feb. 8 under the prodding of Sen. Richard Saslaw, a Fairfax County Democrat, Senate Majority Leader and the bill's patron.
During hearings, Sen. Saslaw said the compromise bill was a substitute that would give CU members "ample opportunity" to comment on a conversion plan and for them to receive notice of the proposal to change their credit union to a mutual savings bank.
He noted that after a CU's board approves conversion, then two-thirds of members voting are needed to support conversion. The State Corporation Commission also has to approve the conversion, retaining the right to deny the change if safety and soundness issues are present.
Unlike the House panel consideration, the Senate proposal sparked questions, mostly centered around CU to mutual savings bank conversions.
Leadership of the Virginia League credits a vigorous e-mail and phone campaign coupled with a Jan. 28 rally with helping turn the tide against original buy-CUs language.
Rick Pillow, president/CEO of the league, had warned the VBA bill failed to protect member rights on several fronts from predatory banks.
"Credit unions were successful in transforming this legislation from a merger and acquisition bill into a credit union charter choice bill," said Pillow in a statement. "The original language in this bill would have been disastrous for credit union member-owners in Virginia,"
Now the bill offers state-chartered credit unions "a clear path for conversion to a mutual savings bank charter, if that is the will of members," concluded Pillow.
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