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Monday, May 27, 2024
HomeNewsLocal newsSenate Reforming Credit Union Oversight

Senate Reforming Credit Union Oversight

V.I. law will be changed so that the Office of the Lieutenant Governor, which overseas banking, will oversee locally licensed credit unions, instead of the Division of Licensing and Consumer Affairs, as under existing law, if a bill approved in committee is enacted. [Bill 31-0072]

Sen. Clifford Graham, the bill’s sponsor, said its purpose was simply to put oversight in the most appropriate location, saying the Office of the Lieutenant Governor contains the Division of Banking and Insurance, which regulates similar industries.

Director of Banking and Insurance Gwendolyn Hall Brady testified in support of the bill’s aims, while recommending some technical changes.

DLCA Commissioner Devin Carrington testified in support, saying, "The department has always been uncomfortable about licensing credit unions," and had neither the legal authority nor the expertise and manpower to properly regulate the industry.

DLCA already seeks advice from the Division of Banking and Insurance before acting on credit unions already, Carrington said.

"The one instance where it did not proved to be a disaster," Carrington said. The only time the Virgin Islands licensed a business as a "credit union" that was not certified and insured by the National Credit Union Administration was when DLCA issued a business license to Her Majesty’s Credit Union, he said.

HMCU received a business license from DLCA in 2008 and held it through 2011, according to court documents.

In 2014, U.S. District Court entered summary judgment of more than $1 million against HMCU and its main director, Stanley McDuffie, over charges of defrauding clients, conspiracy and racketeering.

The court found McDuffie and HMCU lied to investors about where the funds were kept, how they were invested, if they were insured and other material matters. It determined HMCU was not legally a credit union at all, and that the CDs it sold amounted to securities. (See Related Links below)

Several court cases related to the alleged fraud are ongoing.

Voting to sent the bill out of committee were Graham, Sens. Sammuel Sanes, Kurt Vialet, Marvin Blyden and Myron Jackson. Sens. Terrence "Positive" Nelson and Tregenza Roach were absent.

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