The Virginia State Corporation Commission denied Virginia Credit Union Inc.’s application to expand its field of membership to include the Medical Society of Virginia—the latest setback to the credit union industry’s efforts to increase its taxpayer-subsidized authority.
Ruling: As advocated by the Virginia Association of Community Banks, the commission said:
Virginia Credit Union did not prove compliance with applicable legal standards.
State law favors the establishment of a new credit union instead of adding a new group to an existing field of membership.
VACU did not establish that the formation of a separate credit union is not practicable or consistent with reasonable safety-and-soundness standards.
State Developments: The Virginia decision is the latest state government roadblock for credit unions following:
Colorado’s vote to defeat legislation that would have allowed credit unions to hold municipal deposits and other public funds.
A new Mississippi law requiring acquired bank assets to remain under the control of an FDIC-insured institution, a key obstacle for tax-exempt credit unions seeking to acquire banks in the state.
A Nebraska banking department decision that restricts cross-industry acquisitions or mergers to chartered financial institutions organized to do business in the state, which blocked an Iowa credit union’s application to acquire a Nebraska community bank.
Federal Activity: At the federal level, the Government Accountability Office recently called on the Office of Management and Budget to study whether tax expenditures—including the credit union tax exemption—are fulfilling their mission.
Ongoing ICBA Push: ICBA continues pressing policymakers to investigate credit unions, testifying last month that Congress should hold a hearing on applying the Community Reinvestment Act to the tax-exempt financial firms. In a recent Medium op-ed, ICBA President and CEO Rebeca Romero Rainey wrote that Congress should join the growing number of states pushing back against credit union overreach.
Grassroots: Community bankers can continue urging Congress to hold hearings on the credit union tax exemption using a customizable message to lawmakers on ICBA’s Wake Up page and its Wake Up Messaging Playbook.