WASHINGTON — CUNA said this week it is getting involved in another banker court challenge to community charters by filing an amicus brief with the Kentucky Court of Appeals on a two-year-old suit brought against the state regulator by an Ashland thrift and the Kentucky Bankers Association.
In court papers, CUNA argued that a lower court erred when it applied federal administrative law precedents to a CU field of membership lawsuit brought in May 2006 by Home Federal Savings & Loan and the KBA seeking to bar the state regulator from approving FOM expansion for six Kentucky CUs on common bond and tax exemption grounds.
Also party to the case is the Kentucky Credit Union League which asked CUNA to file its amicus since the FOM matter "has national implications," said a CUNA spokesman.
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The Home Fed/KBA suit against the Kentucky Office of Financial Institutions alleges OFI has no authority under Kentucky law to approve geographic FOM bylaws for Kentucky CUs. However, last October, the Kentucky Circuit Court for Franklin County sided with the plaintiff and ruled that the OFI exceeded its statutory authority when it approved the FOMs for the six state-chartered CUs between 2000 and 2005.
In explaining its amicus brief, CUNA General Counsel Eric Richard said the lawsuit is part of a general pattern "in which bankers have been challenging community charters in state courts around the country." Other recent examples include a case now before the Pennsylvania Supreme Court plus Missouri litigation resolved through legislation.
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