WASHINGTON — While on the sidelines for the last year, CUNA has now filed an amicus brief in the Kentucky court case dealing with another banker-driven challenge to community charters.
This time CUNA has filed 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–rather than state rules–to a CU field of membership lawsuit brought in May 2006 by Home Federal Savings & Loan and the KBA. The suit seeks to bar the state regulator from approving field of membership expansions for six Kentucky CUs on common bond and tax exemption grounds.
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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.
The Home Fed-KBA suit against the Kentucky Office of Financial Institutions alleges OFI has no authority under Kentucky law to approve geographic field of membership bylaws for Kentucky CUs.
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 geographic FOMs for the six state-chartered CUs between 2000 and 2005.
CUNA General Counsel Eric Richard said in joining the case, CUNA maintains the suit "is part of a pattern in which bankers have been challenging community charters in state courts around the country."
In addition to Kentucky, Richard noted, multiple cases have been brought in Missouri, since resolved by state legislation, plus Pennsylvania where a much-publicized charter case is now before that state's Supreme Court.
The six Kentucky CUs named in the original bankers' lawsuit are: the $101.7 million Members Choice CU, Ashland; the $11.5 million C&O United CU, Edgewood; the $77.7 million Service One CU, Bowling Green; the $30.7 million Beacon Community CU, Louisville; the $57 million GTKY CU, Lexington; and the $43 million Kentucky Employees CU, Frankfort.
CUNA's amicus brief states that the lower court "incorrectly applied federal administrative law precedent, instead of Kentucky administrative law, to deny the OFI judicial deference."
The court further erred, CUNA argued, because if correctly applied the federal precedent would have compelled the court to back the state regulator under legal codes.
"Under judicial deference, if the statutory language in question is ambiguous, the court is required by law to give deference to the regulator's interpretation unless the interpretation is unreasonable," said CUNA.
A third point in the CUNA brief criticizes the court for failing to consider the actual facts of the case, "never having investigated the actual fields of memberships of the credit unions named in the suit."
A date for hearing the CUNA brief or the main body of the case has not been set by the Kentucky Appellate Court, officials said.
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