Removing Barriers Blog

VCUL Pushes CU- Strengthening Legislation
Posted January 14, 2016 by CUNA Advocacy

Yesterday, two Virginia Credit Union League-supported bills were introduced in the Virginia House of Delegates. House bill 871 would permit credit unions to accept deposits from public entities and House bill 874 would give the state regulator authority to grant credit unions greater field of membership (FOM) flexibility.

Virginia law currently prohibits the Commonwealth, counties, cities, and other political subdivisions from depositing public funds, such as tax receipts, with credit unions. The public funds bill allows credit unions to join other qualified financial institutions in holding public deposits. Credit unions would be held to the same standards in terms of collateralization to protect public funds, and will be subject to the same regulatory scrutiny as other qualified financial institutions. The Virginia league is arguing that offering state and local officials the choice to deposit public funds into local credit unions provides greater competition in the marketplace.

The league further argues the new FOM bill is a Virginia-specific solution that will give state credit unions the flexibility they need to continue to serve their members. If enacted the legislation would modernize credit union laws by:

  • Allowing state-chartered credit unions to serve multiple groups and communities; and
  • Modifying restrictions that prevent certain credit unions from merging with one another

Currently, state-chartered credit unions are limited to serving either a single group with a common bond, multiple groups of no more than 3,000 people, or a single community.  While Virginia law already permits state-chartered credit unions to merge if there is an emergency, such as when one of the credit unions is on the brink of insolvency, the change would allow those credit unions to merge before conditions deteriorate.

Elder financial abuse legislation was also recently introduced in Virginia. The bill, H 620, allows credit unions and other financial institutions to refuse to execute a transaction if the financial institution or its staff have a good faith belief that the transaction may involve or contribute to the financial exploitation of an adult.