LYNCHBURG, Va.-Virginia Credit Union League is marshaling its forces to oppose state legislation that would create a streamlined process for credit unions and banks to merge.
League Director of Governmental Affairs Karin Sherbin said the organization fears that the bills, which are endorsed by the Virginia Bankers Association and are moving through both the upper and lower state houses simultaneously would "open up a can of worms" and fail to protect members' interests.
"We think the bankers are couching their legislation as a simple matter of letting two parties do what they want to do, whereas we think it is a very complex matter to go from not for profit to stock and ensure that credit union members are protected," she told Credit Union Journal.
"We oppose the legislation as introduced and are asking legislators either to oppose or at the least carry it over until 2011 so that the matter can be given the serious consideration it deserves. Otherwise, this legislation is just a way to make it easier for banks to gobble up credit unions."
Chief among the concerns the Virginia league has raised is the imprecise language and haste in which the bill was written. Sherbin noted that the legislation does not provide any guidance on how members would be notified in the event of a vote on a merger that would turn their credit union into a bank. It is also unclear what would happen to member equity in such a situation.
"It just seems as though it is a very hastily written document that doesn't make sure credit unions and their members have the protection that they need in such a change in status," she said.
Bank Trade Group Speaks Out
But Phil Boykin, SVP-director of government relations at the Virginia Bankers Association, argued the legislation is "all about parity between federally chartered and state chartered institutions." He said the VBA reached out to the credit union lobby in early October with a draft of the legislation but never heard from the group about any possible changes. He also dismissed the idea that CU members would not be properly protected should the legislation pass.
"We feel that our bill has ample protection, however we welcome additional amendments," Boykin said. "We're always willing to talk up until the very end of the process."
Sherbin confirmed the VBA did deliver preliminary language to league president Rick Pillow in October and surveyed a few members about the proposal, but noted that its board did not have an opportunity to discuss the legislation until its Jan. 13 meeting.
CUs Ask: 'Where's the Fire?'
"We are not going to make a full-blown decision without input and due consideration at least from the board of directors," she told Credit Union Journal. "We are not bound by the bankers' timetable. What's the rush? Where's the fire? The bankers' language changed by the time they filed the bill. Why not give this serious issue the review and discussion it deserves?"
To help the CU league get its position heard, the league has fired up grassroots activists who are making phone calls and sending e-mails to state legislators. Last Thursday, Credit Union Day in the state capital, more than 350 state CU leaders headed to Richmond to canvass legislators and push them towards opposition or at least a delay until the 2011 session. No hearings have been scheduled on the bill, but because the legislature meets for only 60 days this year, progress could be swift if it gains support in either chamber.
Following CU Day, the league is compiling a head count of legislators for, against and undecided on the bill. The league has yet to assess the position of new Gov. Bob McDonnell who took office last month. "Really, at this point the focus is on the legislature," said Sherbin.
