Alabama's top regulator and the former CEO and board of thefailed $193 million Mutual Savings Credit Union of Birmingham havesettled their legal dispute although the CU remains under stateconservatorship.

In a brief statement issued last week, Dale Dalbey, the Mutualpresident who was ousted last July from the Birmingham CU alongwith seven directors by Administrator T. Glenn Latham over chargesof mismanagement, have agreed to settlement terms calling forDalbey and the board to be “reinvited” to their former jobs oncethe conservatorship is lifted.

The settlement caps a legal battle in a state court overcomplaints by Dalbey and the board that regulators actedarbitrarily and wrongly in placing Mutual under state control.Latham countered that the CU got into deep trouble on faultycommercial loans and was operating “in an unsafe condition” andboard members had “spent money wildly.”

In a Columbiana, Ala., court, Dalbey and the directorsvigorously disputed the claims seeking an injunction to overturnthe conservatorship and restore their jobs.

Hearings on the Oct. 26 suit before Shelby County Circuit JudgeHewitt L.?Conwill?were eventually postponed as the parties begannegotiating a settlement.

The Jan. 18 press statement said the parties “as a result of thesettlement” have been invited to rejoin the CU once the stateconservatorship is terminated.

Dalbey, former treasurer of the League of Southeastern CreditUnions and an ex-member of CUNA's corporate task force, maintainedMutual's problems related to economic conditions in the area.Moreover, the former management argued that Mutual's low capitalposition at the time was no different from other Alabama CUs andMutual should not have been targeted for conservatorship.

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