Va. lawmakers advance bill to pay credit union board members

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Lawmakers in Virginia are moving forward a bill that would update the state’s credit union statute to allow state-chartered CUs to compensate board members.

Supervisory and credit committee members can already be paid for their efforts, but a new proposal, HB 813, would add directors to that as well. Credit unions have historically had all volunteer boards and while most still do, a small but growing number have begun offering compensation in recent years in order to better attract candidates with the skills necessary to oversee a modern complex financial institution.

“It’s not just credit unions, but other entities have had difficulties attracting volunteers, so credit unions that have had some issues attracting qualified pool of volunteers may see this as an opportunity,” he said. “I don’t think it will be [utilized] 100% in any shape or form because some credit unions believe philosophically that the board should remain volunteers, and that’s something we’re cognizant of... But for those that feel it will help them further their business and growth and outreach and actually serve their members better, it’s just an option.”

The National Credit Union Administration’s online database lists 120 active CUs in Virginia, but only 27 of them are state charters. As such, said Miles, the law is unlikely to be widely utilized. There are several reasons for that, he explained. For starters, Virginia is heavily focused on parity between charters.

“Virginia law, as it relates to credit unions, is generally one of parity to federal statues,” he said, adding “If federal credit unions have the power then the general assembly sees fit to allow the state charters to do that; they’ve been hesitant to go beyond the powers afforded to the Federal Credit Union Act.”

While bank groups frequently put up a fight when state credit union statutes come up for debate, Miles said the path forward has already been cleared thanks to an amendment to the bill that added a $6,000 cap on annual compensation.

“We offered the cap to mitigate concerns [banks] raised with respect to competition,” said Miles. “I wouldn’t say they’re supportive of the bill but they’re not objecting to it at this point. We’ve mitigated their concerns to the degree possible and they will not oppose the bill going forward with the cap.”

While HB 813 moves ahead, one other credit union priority is currently on hold. A bill allowing state- and federally chartered credit unions to accept public deposits has been tabled for the year, said Miles. The league still hopes to move the issue forward, however, and has plans to bring it up again during the next legislative session beginning in 2021.

Credit unions in New York were approved for public deposit access late last year and a growing number of state leagues are pushing for laws to be updated in order to allow credit unions increased liquidity.

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Corporate governance Compliance Law and regulation State-chartered credit unions Virginia