MADISON, Wis. - After months of wrangling in court, on May 17, a Wisconsin judge upheld a previous decision by the five-member Credit Union Review Board agreeing that a credit union service organization has the legal authority to offer business loans to credit union members. The Business Lending Group was formed last May by Banta Community CU of Menasha, Citizens First CU of Oshkosh and Fox Community CU of Appleton as a CUSO to originate member business loans up to $1 million. The Wisconsin Bankers Association, a Madison-based trade group representing more than 400 banks, questioned the legality of forming such a group, and the organization proceeded to file a lawsuit in January accusing the credit unions of violating the state's credit union statutes which stipulate that services provided by a CU corporation such as BLG, are limited to the "services associated with the routine operation of credit unions and credit union organizations" (CU Times, July 29, 1999.) The WBA along with Anchor Bank of Madison and F&M Bank of Kaukauna had their initial complaint thrown out late last year by the Credit Union Review Board, an advisory group appointed to serve as liaisons to the state's Office of Credit Unions. Similarly, the Wisconsin Department of Financial Institutions, the agency that regulates banks also dismissed the complaint. At this point, the banking trade group has chosen not to appeal, said Rose Oswald Poels, vice president of legal affairs for the Wisconsin Bankers Association. "Our reason for not appealing further was not that we weren't concerned but because the legality of our suit was overruled at two stages," Poels explained. Poels said the association "will continue to monitor the activities of the Business Lending Group to make sure the [company] isn't crossing any lines." Meanwhile, the Business Lending Group will proceed with business as usual, said David Coggins, the group's president. After the last dismissal by the DFI, Coggins said they've "tried to keep a low profile and tried not to inflame" an already inflammatory relationship. "We were hoping it would quietly go away," Coggins added, "because the issue for us has always been to provide a much-needed service to credit union members." Coggins said two area businesses will be issued loans in August but declined to name the companies. While the DLG is "protective of its chartering information," Coggins said he's talked to credit unions in Colorado, Utah, Michigan and Florida who have expressed interest in forming similar business lending venues. -
samaad@bellsouth.net
