FRANKFORT, Ky. — Oral arguments on a credit union field of membership suit brought by the Kentucky Bankers Association challenging community-based expansion will begin July 12, according to an order issued by a Franklin County Circuit judge.
The test case represents another state-by-state legal foray by an American Bankers Association affiliate to thwart FOM expansion using common bond and tax-exempt language in both federal and state statues.
The Pennsylvania Supreme Court began hearing arguments earlier this month on a similar case involving FOM challenges against two Pennsylvania CUs.
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Like the Pennsylvania Credit Union Association, the Kentucky Credit Union League, which filed an amicus brief May 14 and joined by six Kentucky CUs, acting as intervenors, has vowed to take litigation to the Kentucky Supreme Court.
The suit by Home Federal Savings & Loan Assn. of Ashland seeks to bar the Kentucky Office of Financial Institutions from granting FOM expansion on grounds state statutes are out of line with federal rules on CU common bonds relating to "general interest" definitions.
Hearing the oral arguments July 12 on the Home Federal petition filed May 2006 will be Judge Phillip Shepherd.
A spokesman for CUNA said its legal staff has been "providing advice and assistance" to the Kentucky League adding, however, "we usually don't intervene in state court cases, and in this case there's been no request so far from the league or the affected credit unions that we do so."
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