ST. LOUIS and HARRISBURG, Pa. -- Credit unions in Missouri and their trade association--the Missouri Credit Union Association--were disappointed 2006 did not bring some resolution to five years of ongoing field of membership litigation brought by the Missouri Bankers Association challenging the language in the state's credit union statute concerning geographic field of membership.

The situation came to a head in March when the Cole County Circuit Court judge threw out the state's CU regulation. Since then, the state Credit Union Commission hasn't been able to come up with a new regulation it's sure won't also be challenged by the bankers.

MCUA senior management met with representatives of the Missouri Bankers Association four times since October, the last time on Nov. 27, to discuss issues concerning proposed legislation that would eliminate the state's five-year field of membership court battles. Although MCUA President/CEO Rosie Holub said "some progress" was made, the two sides still ended the year far apart on several critical issues.

Holub said another meeting was scheduled for Dec. 18, at which time the MCUA and bankers will determine if they need to meet again before the end of 2006.

According to Holub, the two sides made progress in the areas of expediting CUs' FOM expansion requests specifically as it concerns the process implemented for publishing the announcements of filings.

They had also made some progress on the more sensitive subject of having clarifying language to avoid any chance of misinterpretation of statutory language, but there was still a lot left unresolved.

Holub emphasized, "We want to make sure going forward that the statutory language doesn't restrict the ability of Missouri state-chartered credit unions to grow.

She was certain, "Both sides are truly in good faith trying to find a middle ground we can both present to the Senate leadership." She also feels the Senate leadership "is trying to bring credit unions and bankers together so they won't have to deal with the issue in the 2007 legislative session." Holub added, "The Senate leadership also wants to stop the bankers' lawsuits against credit unions because they're costing the state a lot of money and resources to be put in the position of having to defend the state agency and Credit Union Commission. The only way we're going to have an end to this is by statute, not regulation. The Senate leadership understands the dilemma."

When the Missouri Senate leadership reconvenes in January, Holub said it would provide the MCUA and bankers with further guidance.

"Our ultimate goal is to have legislation passed during the 2007 session that will allow Missouri credit unions to expand again," Holub said.

"We're mobilizing our grassroots efforts so they're ready if needed to oppose any adverse legislation if it's introduced, but we hope we won't have that battle. This is truly critical to our viability," she said.

Meanwhile, in Pennsylvania, just when it seemed the Belco Credit Union community charter case might be making progress, the CU and Pennsylvania Department of Banking were delivered a curveball setback. Belco started the year upbeat after the Department of Banking made an administrative decision in late 2005 denying a request by the Pennsylvania Bankers Association for a rehearing of the agency's approval of Belco's community charter conversion. The case was initially set aside pending the outcome of a decision by the Commonwealth court on the case concerning Freedom Credit Union and TruMark Financial Credit Union. When the court ruled in favor of the CUs on the community charter issue and three of the four tax counts raised by the bankers in that case, the bankers then asked that the stay on the Belco case be lifted.

In September 2006, both the credit union and banker sides presented oral arguments in the Belco case, and in November the Pennsylvania Commonwealth Court ruled against the banking department and ordered the agency to conduct new hearings. The court also ruled that the bankers were entitled to be heard at the hearings and could have access to hearing files or records relevant to Belco's community charter conversion.

PCUA Vice President, Communications and Marketing Michael Wishnow said the state agency has petitioned for a re-argument on that issue, and "the department feels its process was a due process" when it made its decision on Belco's application. [email protected]