WASHINGTON-CUNA, NAFCU, and the Pennsylvania Credit UnionAssociation have announced that they intend to apply to interveneon behalf of NCUA in the American Bankers Association's lawsuitchallenging three Pennsylvania community charters. After backingdown on a simultaneously filed lawsuit in Utah over the ability ofnon-multiple group credit unions to adopt underserved areas, NCUAand the trades appear determined to fight the ABA's challenge ofthe agency's approval of a six-county area plus one town involvingthree metropolitan statistical areas and over one million residentsfor $1 billion Members 1st FCU and subsequent approvals of the samearea for $100 million AmeriChoice FCU and $78 million NewCumberland FCU. NCUA changed its Field of Membership and CharteringManual a couple years ago to allow credit unions to rely onprevious determinations of well-defined communities rather thanrequiring subsequent applications to provide duplicate proof of thesame community. Members 1st CEO Bob Marquette also recently saidhis credit union will be intervening as well. AmeriChoice FederalCredit Union CEO Kipp Stecher said his credit union has not hiredoutside counsel to intervene but is working with the PCUA. “We metin Harrisburg with all the attorneys involved.and they laid it allout that this is quite different from the [Tooele] case,” hecommented, adding, “I think it's more of a harassment thing thananything else.” Bingham McCutchen LLP Partner Paul Lambert-who isno stranger to credit union litigation-said he expected to file thedocuments to intervene some time last week. “We've never beenprecluded from intervening in one of these cases,” he stated. Thecredit union trades are eligible to intervene because they have astake in the case and have different interests in its outcome.NCUA, the trades, and credit unions cannot supplement theinformation because the facts of the case must stick with thecredit unions' original package used to determine the existence ofa community, Lambert explained. What they can do is “argue thesignificance of the information,” he said. If the judge at thispoint in the case does not invalidate the case, the intervenorshave another defense strategy. “On top of that issue is the lachesdefense where you assert that the other side waited too long tobring action,” Lambert said, pointing out that it had been morethan two years since Members 1st was approved for the communitycharter and it relied on the validity of the agency's decision. Thefiling deadline in the case is Feb. 6 and a hearing date has notbeen set, according to the attorney. Lambert said there will be aconference in mid-February between the court and the parties todetermine how the case will proceed. Marquette has said his creditunion's application was two-and-a-half years in the making and heis “very, very, very confident” about it. According to CUNA GeneralCounsel and Executive Vice President Eric Richard, CUNA and thePCUA decided to intervene so credit unions can continue to rely onthe decisions of the agency. “NCUA has the right to act on its owndiscretion and independently in determining what works best for thecredit unions that it regulates, and must continue to have thatright into the future,” Richard said. “The criteria for defining alocal community have been upheld by the courts, and the agency musthave the right to apply these criteria in reasonable ways.” “What'sat stake is the authority of NCUA to make decisions that itbelieves are appropriate for credit unions and the ability ofcredit unions to rely on those decisions when they move forwardwith expansions into approved areas,” NAFCU Director of RegulatoryAffairs Carrie Hunt said. “These three credit unions have acted ingood faith, expending significant resources in new infrastructureto serve their members. Their rights should be protected.” PCUASenior Vice President of Communications Mike Wishnow agreed, “Thereason we chose to intervene was to support NCUA's decision in thiscase. We feel it's imperative that NCUA-and the state regulatorsfor that matter-be able to use its discretion.” He added that NCUAhas a strong case and “gave due and appropriate” attention to thecommunity charter applications. In the last couple of years,Members 1st has made significant investments in the approved areas,including marketing, branches, ATMs, and expanded phone andcomputer systems, according to Marquette. AmeriChoice's Stechercommented, “We got the community charter this past September. Wehaven't acted upon it yet.” The credit union had originally plannedto begin expansion after the first of the year but that was haltedwhen the lawsuit was filed. AmeriChoice sought the communitycharter in order to grow and expand its service. Calls to NewCumberland FCU CEO Donald Varner seeking comment were not returned.As intervenors, the trades and credit union take on the samebenefits and risks as the defendants. According to CUNA's Richard,the trades weighed the positives and negatives of intervening andthe key downside is the expense and commitment of resources. OnNov. 1, 2005, the week of the House Ways and Means Committeehearing on the credit union tax-exemption, the ABA, the CreditUnion Strategies Task Force of Pennsylvania (a group of 275Pennsylvania banks), and Legacy Bank filed suit against NCUA. -

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