ST. LOUIS and HARRISBURG, Pa. -- Credit unions in Missouri andtheir trade association--the Missouri Credit UnionAssociation--were disappointed 2006 did not bring some resolutionto five years of ongoing field of membership litigation brought bythe Missouri Bankers Association challenging the language in thestate's credit union statute concerning geographic field ofmembership.

The situation came to a head in March when the Cole CountyCircuit Court judge threw out the state's CU regulation. Sincethen, the state Credit Union Commission hasn't been able to come upwith a new regulation it's sure won't also be challenged by thebankers.

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

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

According to Holub, the two sides made progress in the areas ofexpediting CUs' FOM expansion requests specifically as it concernsthe process implemented for publishing the announcements offilings.

They had also made some progress on the more sensitive subjectof having clarifying language to avoid any chance ofmisinterpretation of statutory language, but there was still a lotleft unresolved.

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

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

When the Missouri Senate leadership reconvenes in January, Holubsaid it would provide the MCUA and bankers with furtherguidance.

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

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

Meanwhile, in Pennsylvania, just when it seemed the Belco CreditUnion community charter case might be making progress, the CU andPennsylvania Department of Banking were delivered a curveballsetback. Belco started the year upbeat after the Department ofBanking made an administrative decision in late 2005 denying arequest by the Pennsylvania Bankers Association for a rehearing ofthe agency's approval of Belco's community charter conversion. Thecase was initially set aside pending the outcome of a decision bythe Commonwealth court on the case concerning Freedom Credit Unionand TruMark Financial Credit Union. When the court ruled in favorof the CUs on the community charter issue and three of the four taxcounts raised by the bankers in that case, the bankers then askedthat the stay on the Belco case be lifted.

In September 2006, both the credit union and banker sidespresented oral arguments in the Belco case, and in November thePennsylvania Commonwealth Court ruled against the bankingdepartment and ordered the agency to conduct new hearings. Thecourt also ruled that the bankers were entitled to be heard at thehearings and could have access to hearing files or records relevantto Belco's community charter conversion.

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