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WASHINGTON – Two of the industry’s leading trade groups, CUNA and NAFCU, are planning to intervene on behalf of the NCUA against the July 15 Utah field of membership suit brought by the American Bankers Association. “We’re still working the issues, but the leadership of CUNA and NAFCU are committed to vigorously defending NCUA’s action,” declared Bill Donovan, NAFCU’s general counsel. The suit, an outgrowth of the Utah tax fight and brought by the ABA, the Utah Bankers Association and four banks in that state, challenges NCUA’s FOM rule-making power on a six-county expansion approved for Tooele Federal Credit Union on April 24. The ABA suit also applies to the FOM expansion granted little more than a week later by NCUA to America First Federal Credit Union and Goldenwest Federal Credit Union, both of Ogden. Donovan said court papers to intervene and nullify the ABA complaint would be brought in U. S. District Court in Salt Lake City “within the 60-day window.” The ABA suit is being seen nationally as the latest legal test of what the bankers charge are excessively liberal FOM rules pursued by the NCUA. NAFCU said the decision to pursue a petition as an intervenor was made by the Oversight Committee of the Campaign for Consumer Choice, the CUNA-NAFCU unit which spurred the industry cause in the fight over H.R. 1151 in 1997-1998. A spokesman for CUNA said the trade group has not made a firm decision on intervention but such action “is likely” following a final review by CUNA attorneys and the organization’s leadership. The ABA sued the agency in the Salt Lake City court to overturn what the ABA calls NCUA’s “arbitrary and capricious” approval of FOM applications of Tooele as well as America First and Goldenwest. The ABA complaint, which seeks a declaratory judgment against NCUA to invalidate the April 24 Tooele approval, argues the agency has subverted its own “well-defined local community” definitions. NCUA, joined by the two trade groups and the Utah League of Credit Unions, defends the agency’s approval as fully meeting the letter and spirit of the law and called the suit a new form of harassment by the banking industry. Dollar called the suit a wasteful expense of taxpayer money, and he expressed “extreme” confidence the courts will uphold NCUA actions. The suit has been assigned to U.S. District Judge Thomas Greene. A spokesman for NCUA’s General Counsel Robert Fenner said the agency has until Sept. 19 to file a response with the case being handled by Justice Department attorneys. “The question is yet to be decided what form our response will take,” said the spokesman noting the agency may decide to move for a summary judgment or outright dismissal. “It’s still very open.” Meanwhile, Donovan said his trade group and CUNA “are proceeding in tandem as we have in the past” on the issue of intervention. It was originally speculated the trade groups might seek an amicus brief as has been the practice in some other cases. Donovan said the petition for intervention “is at a higher level” than amicus and makes the trade groups parties to the action. He said NAFCU is looking at hiring outside counsel “and we’re talking to experienced” attorney groups, but he declined to say whether they would be primarily from Washington, D.C. or Salt Lake City firms.. NAFCU’s mission, he said, is to “protect, defend and advocate” for federal CUs, and the ABA suit “is a direct assault on the integrity of the federal charter” and will be fought “vigorously in court.” In Salt Lake City , Scott Earl, president of the Utah League, said the issue of intervention and legal strategy came up two weeks ago in discussions during the annual meeting of the American Association of Credit Union Leagues held in Park City, Utah. Speaking at the AACUL meeting was Eric Richard, CUNA’s general counsel, who reviewed legal options. Asked if the Utah League might also join as an intervenor, Earl said no decisions have been reached noting “there’s still time to determine the best course.” “This is not something you handle lightly since we are very cognizant that this lawsuit has an impact on credit unions across the country and on that score we want to make sure we are working in concert with CUNA,” said Earl. “We want to do what is best to ensure the bankers’ suit does not prevail.” -

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