NCUA Will Not Appeal Utah FOM Decision, but Intervenors Still Undecided; CUs Operating Under Temporary Interim FOMs
ALEXANDRIA, Va.-NCUA will not be appealing Judge Dale Kimball's decision in the Utah field of membership lawsuit to remand the field of membership approvals back to the agency, according to NCUA General Counsel Bob Fenner. "We'll have a more effective and speedier resolution just working within the judge's remand," he explained. Judge Kimball's finding stated, "Because the informal process in front of the NCUA does not allow for input by the public or other entities, the NCUA must have some gatekeeping responsibility to ensure that the "local" requirement is satisfied. It cannot act as a rubber stamp or cheerleader for any application brought before it. This case is troubling because there is no indication in the record that the NCUA questioned any of the data TFCU provided or that the NCUA queried into areas that would diminish the likelihood of finding a "local" community. If the NCUA had conducted a critical analysis of the information provided, it should have recognized areas of concern that required further discussion." Tooele Federal Credit Union has been forced back to its previous field of membership serving solely Tooele County, Utah. Because the other three credit unions simultaneously converted from state to federal charters when they applied for the affected six-county field of membership, they were left with federal charters but no field of membership to serve, Fenner stated. America First Federal Credit Union and University of Utah Federal Credit Union have subsequently been approved to serve the interim community field of membership of Salt Lake County. Goldenwest Federal Credit Union went back to serving the multiple SEGs from its state charter. Each of the credit unions can continue serving the members of record and their families. The interim fields of membership only apply until each credit union decides how it wants to go. "It is up to each of these four credit unions whether they want to reapply for the six-county community," Fenner said. He added he would not predict whether the NCUA Board would approve the community with the new information or not. However, the institutions have other options, Fenner pointed out. They could keep the interim fields of membership or apply for one of the two metropolitan statistical areas within the six counties, among other choices. Messages left with three of the four credit unions were not returned by press time. America First Federal Credit Union Public Relations Coordinator Nicole Cypers said that to her knowledge, NCUA was reviewing the six-county area to determine what parts of the area could constitute communities that the credit union could adopt. She added that the credit union is "cooperating with NCUA as much as possible and following the letter of the law." Cypers said America First is "hopeful" they will be able to serve more than just the interim field of membership encompassing Salt Lake County. The credit union is also hanging on to an area it took over when it acquired Virgin Valley Credit Union as a state charter. Previously, America First Federal Credit Union announced that it had halted new membership recruitment in the six-county field of membership. "We are operating on a temporary interim field of membership in the counties," said an America First spokesman commenting on NCUA's directive. According to NAFCU General Counsel Bill Donovan, "As far as the impact of the Utah case is concerned, it's my understanding that each of the affected credit unions were granted interim fields of membership prior to the end of last week," Donovan said. "That is viewed as an interim measure and the other options that are available to us and the credit unions are still under study." Later last week, Utah League of Credit Unions CEO Scott Simpson confirmed that the intervenors-including CUNA, NAFCU, the Utah League of Credit Unions, and the four affected credit unions-are still studying their options. As intervenors in the case, the organizations have the power to appeal even if NCUA does not. "I think I can understand NCUA's decision," Simpson stated. Representatives from CUNA were not available at press time to provide comment. So has the decision in the Utah case made NCUA keep a sharper eye on the larger community field of membership applications? "Extra scrutiny? I wouldn't say that. We're giving all the large community applications careful scrutiny as we always have," Fenner said. NAFCU President and CEO Fred Becker, a retired attorney with the Navy judge advocate general's office, said he had not heard directly from NCUA that they were not appealing and would not comment on that. However, he stated, "Most important to the credit union community is the fact that the judge did not in anyway invalidate NCUA's rules or regulations." The ruling in this case is very fact specific, applying specifically to this situation, Becker explained, and it does not apply to other community charters. He added that this banker victory should not encourage the credit unions' archenemies. "Each case is fact specific. They've lost so many. Sooner or later, it's safe to assume, they would hit one in the bounds of the field," he said, likening the case to a hit down the first base line. - firstname.lastname@example.org CU Times Senior Correspondent Jim Rubenstein contributed to this story.