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News Now

CU System
Va. Senate committee passes conversion bill
LYNCHBURG, Va. (2/11/10)--The Virginia Senate's Commerce and Labor Committee Monday evening approved, by 15-0, a bill that would allow state chartered credit unions to convert to mutual savings banks using the same pathway as federally chartered credit unions. The voice vote was on Senate Bill 440, a twin bill to House Bill 482, which was approved last week by the House Commerce and Labor Committee, according to the Virginia Credit Union League. The measure is scheduled to go through three readings on the House floor this week, with a possible vote taking place as early as Friday, said Lewis Wood, director of public relations and communications. Sen. Dick Saslaw (D-35), chairman of the Senate Commerce and Labor Committee and Senate Majority Leader, was the bill's patron in the Senate. Saslaw told the panel that the bill before it was a substitute bill that would give credit union members "ample opportunity" to comment on a conversion plan and to receive notice of the proposal to change their credit union to a mutual savings bank. He noted that after a credit union's board approves conversion, the credit union needs two-thirds of voting members to support conversion. The State Corporation Commission also has to approve the conversion and retains 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 the impact of a credit union-to-mutual savings bank conversion. Saslaw noted that conversion to a mutual savings bank charter would allow the former credit union to bid on public deposits, "greatly enhance business lending opportunities," and turn credit unions into "taxpayers that contribute to the state's General Fund." The league provided the language for the substitute bill in both the Senate and House committees. Originally, the Virginia Bankers Association had proposed a bill that would make it easier for stock-owned banks to take over credit unions, a proposal rejected in January by the league's board because it didn't protect members' rights (News Now Feb. 8).


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