SALT LAKE CITY – Attorneys for NCUA and industry trade groups began plotting their legal strategy this week on exactly how they might respond to an American Bankers Association suit here challenging "local community" definitions on field of membership rules for three Utah credit unions. For its part, NCUA said it was "reviewing the complaint and would make an appropriate response" after consulting with the U.S. Department of Justice attorneys. but the agency expected the first hearings in a Utah federal district court would not begin until late September. A spokesman for CUNA said its attorneys have been in touch with NCUA regarding the ABA suit brought against NCUA over FOM approvals for Tooele Federal Credit Union, America First Federal CU and Goldenwest Federal CU, but it was uncertain whether the trade group might file an amicus brief as it did in the more recent FOM case involving a Missouri Bankers Association court challenge of Telcomm CU's FOM expansion. That case involving the Springfield, Mo.-based CU which a state appellate court has sided with CUs in, is currently before the Missouri Supreme Court. In its formal statement on the ABA suit, CUNA General Counsel CUNA General Counsel Eric Richard said "bankers face a difficult task in convincing a court that their judgment is superior to that of a regulator." He added, "Courts have regularly given great deference to regulators in such cases, and there is no reason to expect a court not to do the same in this case." Bill Donovan, senior vice president and general counsel for NAFCU said a key ruling favoring CUs was made last March by U.S. District Judge Colleen Kollar-Kotelly who strongly upheld NCUA's rule-making powers. The ABA had sought an injunction against NCUA to bar implementation of new FOM rules, but the District of Columbia federal judge criticized the bankers' tendency to complain selectively about NCUA policies. Judge Kollar-Kotelly, noted NAFCU, laid out a tough standard for bankers regarding ABA claims that banks were suffering `irreparable" harm because of FOM policies. Judge Kollar-Kotelly wrote that NCUA's rules "be flexible enough to account for the remarkably broad range of potential local communities in a nation" with a diverse population from both demographics and geography. The ABA suit here contends the NCUA has illegally subverted local community definitions on Tooele Federal to include a six-county area "larger than the state of Maryland, stretching from Wyoming to Nevada." [email protected]

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