Comparing the NCUA's actions to the children's story Alice in Wonderland, the National Federation of Community Development Credit Unions hopes backers of Kappa Alpha Psi FCU persist in their case against the agency.
"We hope that they do decide to have their day in court, and that the judge has the opportunity to offer his view on the procedure," the National Federation said. "Frankly, for the federation and others in the credit union movement, the logic of liquidation proceedings is puzzling at best. When an appeal can only be heard and decided after the liquidation is underway, it brings to mind Alice in Wonderland: 'Let the jury consider their verdict, the King said, for about the twentieth time that day. 'No, no!' said the Queen. 'Sentence first-verdict afterward.'"
The NCUA issued an order of liquidation against the small community development credit union on Aug. 3 and the credit union took the agency to federal court.
The National Federation noted the case raised a number of questions, including why the NCUA did not pursue a purchase and assumption agreement with the CU, which would have allowed the 1,400 members of this credit union continue to receive service and whether the NCUA's restatement of the credit union's financial statements was irrefutably correct.
"Was there truly 'no prospect' of this tiny, young credit union obtaining or generating the few tens of thousands of dollars it needed to become 'adequately capitalized' over the next four years," the federation asked.
The NCUA may prevail in court, the federation noted, but added that does not mean that the credit union movement will perceive the NCUA's actions against credit unions as appropriate, unavoidable, and fair. Amid the continuing pain of the corporate credit union crisis, we believe the credit union movement's perception of the agency matters," the organization concluded.