HARRISBURG, Pa. — The Pennsylvania State Supreme Court agreed to hear oral arguments Nov. 28 in the field of membership portion of a lawsuit brought by a conglomerate of banking groups against the Pennsylvania Department of Banking.
"Mainly, it's a review of what the state regulator did or didn't do," Pennsylvania Credit Union Association Executive Vice President/General Counsel Rick Wargo explained. The Pennsylvania Bankers Association has called into question whether the state regulator properly reviewed the information provided leading to its decision to approve community charters for Freedom Credit Union and TruMark Financial Credit Union.
Wargo drew a distinction between this case and the one at the federal level, American Bankers Association vs. NCUA, in that the Pennsylvania regulator held four days of hearings in July 2004. "We felt the regulator bent over backward," he said, to afford interested parties the opportunity to comment. The ABA has challenged that NCUA did not consider information from the opposition, among other things.
Recommended For You
The case began with a banker challenge at the administrative level and has since been rejected by the Commonwealth Court at the appellate level.
The bankers also introduced taxation as part of the litigation, Wargo explained, calling the credit union exemption from federal income tax "unconstitutional" according to the state's constitution. It was argued before the Supreme Court in May but a decision is still pending.
Finally, there is another challenge on taxation at the appellate level in which the bankers claim that businesses of the same class must be
taxed similarly.
A similar case involving a community charter for Belco Credit Union has also been briefed before the Supreme Court and is awaiting a decision. The facts are slightly different but a decision in either could impact the other, according to Wargo. "It could. It's hard to crystal ball gaze…to some extent they both involve what procedures the regulator coulda, shoulda, woulda used."
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
