GERMANTOWN, Md. – The $204 million Mid-Atlantic Federal Credit Union has written to the Office of Thrift Supervision, urging the federal regulator to turn down the application of the $31 million Lafayette Federal Credit Union to change to a mutual bank.

The OTS takes comments on all its charter change conversion applications.

In his July 7 comment, Mid-Atlantic FCU CEO, Charles Thomas, noted that the original authorizing legislation for federal thrifts, the Home Owners' Loan Act of 1933, had mandated OTS to charter thrifts only in areas where they were needed and suggested that Lafayette's change to a mutual bank did not meet that standard.

While it may seem logical to presume that the mere fact a CU succeeds might lend credence to the belief that a need exists for another bank, Thomas wrote, “it is quite a stretch, to the point of being arbitrary to suggest that a savings bank serves and satisfies the same needs of the community/members/depositors/borrowers as does a credit union.”

Thomas pointed out that while Montgomery County, where Lafayette and Mid-Atlantic are located, has 16% of the state's population, it has 33% of the state's saving's associations and branches.

Steve Bisker, a noted credit union attorney in Alexandria, Va. who helped the credit union prepare the comment noted that that the point was to question the way the agency had been following its basic purposes under the law.

“Banking interests have a history of writing NCUA about things they believe NCUA is doing wrong,” Bisker commented. “The credit union wanted to make its opinion known to the OTS.”

Because the comment has entered the administrative record in regard to the OTS' decision on Lafayette, the agency will have to deal with it in the course of its decision making, Bisker explained, though the agency would not likely address a reply to the CU directly.

“Although Mid-Atlantic could have requested OTS hold a hearing on the proposed conversion, it didn't,” Bisker said. “Though the CU did not ask for one, OTS, on its own, could also hold a hearing,” he added. A hearing would likely include a broader spectrum of views than just the one commenter, Bisker said. -dmorrison@cutimes.com

Instant Insights /

Mid-Atlantic FCU Weighs in On Lafayette's Conversion Application

Related Stories

Recommended For You