LYNCHBURG, Va. (2/8/10)--Virginia's House Commerce and Labor Committee Thursday unanimously voted in favor of substitute language for a bank/credit union merger bill, transforming it from a merger and acquisition bill into a charter choice bill for state-chartered credit unions. The substitute House Bill 482 was drafted by the Virginia Credit Union League in response to the original bill offered by state bankers. It gives state-chartered credit unions considering conversion to a mutual savings bank the same guidelines that federal credit unions must follow in similar conversion processes. The new substitute bill now heads to the full House for consideration, perhaps as early as today. The league said it expected the Senate version of the bill--SB440--would be heard today by the Senate Commerce and Labor Committee. "I think this is a positive result for what was a desperately flawed bill," said league President Rick Pillow. "The original language in this bill would have been disastrous for credit union member-owners in Virginia, because it failed to protect member rights in cases of a conversion or acquisition to or by a for-profit bank," Pillow said. "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 the members, while providing the same member safeguards currently in place at the federal level for such conversions." He made two points:
* "This wasn't our bill originally, but we think the substitute we brought to the table is a vast improvement over the language originally offered," he said. * Parity between the state and federal charters has long been a commitment of the Virginia league. We believe that credit unions and their member-owners should have charter options."
He noted that as originally drafted, the legislation "was nothing more than a merger and acquisition bill, allowing stockholder-owned, for-profit banks to merge with or acquire member-owned, not-for-profit credit unions. The bill is now a credit union conversion bill, offering state-chartered credit unions the same charter conversion opportunities afforded federally chartered credit unions." "Charter options are an unfortunate necessity due to an always uncertain economic and regulatory environment," Pillow said. "The substitute bill allows choice while protecting member interests through full disclosure and notice, which was always our priority in negotiating with lawmakers and bankers." Pillow thanked Virginia's credit unions "for their grassroots work this past month in educating lawmakers about the potential impact of" the original bill. "I don't think there's any question that the visits, phone calls and e-mails from credit union supporters strengthened our hand at the negotiating table. I think lawmakers saw clearly that their credit union constituents could not abide the original language of this legislation," he said.