WASHINGTON - In separate and seemingly disconnected developments March 14 in the court with jurisdiction over the bankers' chartering manual suit against NCUA, the American Bankers Association (ABA) reiterated its case for extended review of agency historical documents just as the presiding judge provisionally ruled against any further review in the matter. In addition, presiding U.S. District Court Judge Colleen Kollar-Kotelly, in a spate of rulings favorable to the CU side, granted intervener status (CUNA and NAFCU already are interveners) to six credit unions whose charter amendments were specifically challenged by the bankers; denied a banker request for an oral hearing; and rejected the application of America's Community Bankers (ACB) to file a pro-banker "friend-of-the-court" brief. "The NCUA and the defendant-interveners filed two sets of motions that are now before the Court," the ABA brief reads. "In the first set of motions, defendants seek dismissal or summary judgment with respect to most of plaintiffs' claims. In the second, defendants ask for entry of a protective order preventing plaintiffs from taking discovery (review) in this case. Both sets of motions rest in substantial part on unsupported assertions made by the NCUA regarding its interpretation of its new membership rule and the adequacy of its rule making record." "ABA recently obtained documents from the NCUA through the Freedom of Information Act ("FOIA") that underscore the inadequacy of the record before the Court. These documents show that the NCUA: (1) relies on nothing more than the preferences of a group's sponsor in granting exceptions to the 3,000 member limit on new group additions; (2) fails to encourage the formation of separately chartered credit unions: (3) has retained (rather than tightened) the criteria used for chartering community credit unions; and (4) continues to approve voluntary mergers of credit unions having dissimilar common-bonds." The ABA then went on to argue that the documents it obtained in connection with Georgia FCU's 1999, over-3,000 potential member group addition indicated the application was granted solely on the basis of the sponsor and FCU's desire to have the group exempted-a standard, the ABA states, that is at variance with the court's wishes. "Conspicuously absent from these documents is any written finding by the NCUA Board that the Beaulieu Group employees are incapable of `reasonably or feasibly' forming their own credit union," ABA stated. (The "reasonably or feasibly" standard is part of H.R. 1151's, over-3,000 potential member exemption clause, but it is further defined to include lack of "sufficient volunteer and other resources"-which was what NCUA drew upon in the Beaulieu group addition.) As to its claim that NCUA is derelict in the formation of new CUs, ABA argued that agency approval of only seven new credit unions in 1999 against the addition of 345 mergers and "thousands of new groups to already existing credit unions" proved that "discovery is needed to determine how and why the NCUA failed so completely with respect to its obligation to encourage the formation of new credit unions." With respect to alleged statutory violations in granting community charter conversions and expansions, the bankers argued that, despite agreement between the litigants that H.R. 1151-mandated requirements in this area redounded to a "more circumspect and restricted approach to chartering community credit unions," NCUA's new regulation is actually "less restrictive" or "identical to" its superseded rule. In so arguing, the ABA cited NCUA documents approving community charters under old and new chartering manual provisions for CBC Federal Credit Union of Port Hueneme, California and Great Basin FCU of Reno, Nevada respectively-both of which, they said, placed "no meaningful limitation on the size of community credit unions, despite the clear congressional instruction to the contrary." The ABA also cited NCUA's new "presumptive community" rule (areas no greater than a county or 300,000 in population) as evidence of greater leniency in the new over the old community charter regulations. Concerning its challenge of NCUA's handling of mergers-which Congress held did not have to conform with SEG addition conditions if they were involuntary-the ABA stated that of the 345 mergers that were approved in 1999 only seven of them were classified by the agency as "completely voluntary." "While the agency has not classified these mergers as `voluntary,'" the brief asserts, "there is no indication that they were necessary to ensure safe and sound operation of one or both of the merger partners, or that they were in any sense involuntary." Though the latest bankers' motion is deemed even by the ABA now to be in abeyance because of Kollar-Kotelly's protective order, general counsel for both CUNA and NAFCU told Credit Union Times that they would be filing a joint response as soon as possible. They also expressed cautious optimism about the all the judge's recent rulings. "In nearly every one of these rulings the judge has taken the position most favorable to the credit union side of the case," said CUNA General Counsel Eric Richard. "She did the same in her first ruling last March. We hope and believe that this bodes well for our ultimate success in the case." "The rulings that Judge Kotelly (handed) down on the 14th we view as a very positive development," added NAFCU Deputy General Counsel Bill Donovan. And it's a positive development because because it is an indication (that) she is moving forward and resolving the issues that lay before her. And every one of the decisions that she has rendered thus far in the case has had a favorable impact on credit unions." "We hope that we will see action on the underlying cause in a matter of weeks." The six credit unions granted intervner status were: CBC Federal Credit Union, First Service Credit Union, Wheatland FCU, Point Mugu FCU, Network FCU, and State Employees FCU. -
gmcorrigan@mindspring.com
