The Virginia General Assembly adjourned sine die on Saturday, February 22, concluding their “short” 45-day session. After dealing with almost 2,000 bills, just over 800 were advanced to Governor Youngkin, who has thirty days after session to sign, amend or veto the pending legislation. With both chambers in the legislature controlled by slim Democratic majorities and 58% of bills that passed garnering more than 40% in opposition votes, Republican Youngkin is widely expected to set a record in the number of vetoes he will issue.

From the banking industry perspective, the results from this session were positive. While it was disappointing not to hold our annual Banker Day in early January due to the city of Richmond water issues, bankers connected with the state representatives through VBA grassroots alerts, advocating for mail theft penalties, community development financial institution (CDFI) funding and opposing credit union public deposit authority. That effort, building on previous engagement with elected officials on those topics during last fall’s regional meetings, helped the VBA Government Relations team secure passage of legislation creating a state-level criminal statute on mail theft with only one dissenting vote, secure $2.5M in the state CDFI Fund through the budget, and stop the credit unions’ latest attempt to expand their authority.

Tracking and providing input and feedback on dozens of individual bills throughout the session covering a wide array of topics – from proposed garnishment process changes to insurance mandates impact on health savings accounts to the use of non-compete employment agreements – the VBA was active in shaping the outcome of numerous proposals. Efforts to inject partisan political ideology into banks’ customer risk evaluation and management as part of the response to supposed “debanking” practices were defeated. Forcing banks to accept or retain customers regardless of their ability to manage and mitigate risk poses significant unintended consequences, including undermining our ability to combat criminal activity under BSA/AML.  We also worked closely on proposed requirements for using artificial intelligence in consequential financial decisions, ensuring recognition of the existing risk management and anti-discrimination laws, regulations and guidance on which banks are examined.

While the Regular Session has ended, all signs point to the General Assembly returning for a special session in response to the ongoing funding and workforce reductions being taken at the federal level. House Speaker Don Scott (D-Portsmouth) created a House Emergency Committee on Impacts of Federal Workforce and Funding Reductions with bipartisan membership, chaired by Delegate David Bulova (D-Fairfax), to assess the potential impact and recommend policies to best protect Virginians and the Commonwealth’s and localities’ coffers due to our physical proximity and economic reliance on federal funding, employment and contracts. As your institution evaluates the impact on your customers and business clients, please keep the VBA apprised of developing trends and your responses so the banking industry can be a resource on policy proposals.

Once the Governor and General Assembly finalize action on the remaining bills next month, VBA General Counsel DeMarion Johnston will create our annual General Counsel Report, summarizing the new laws impacting banking for distribution in advance of the July 1 effective date for most changes. Even as we wrap up the 2025 Regular Session, we are already looking ahead to both the November elections – with Governor, Lt. Governor, Attorney General and all 100 House of Delegates seats on the ballot – and policy development for 2026. The VBA and banking industry will be involved in new legislative studies on another variety of topics, including blockchain, mortgage deed fraud and appraisal bias. If you are interested in being involved in those discussions or have other state-level policies you have identified for potential attention and alteration, please do not hesitate to reach out to us.