Arlo Washington, founder and former CEO of the conserved People Trust Community Federal Credit Union, filed an emergency motion in Arkansas federal court seeking a temporary restraining order to block the NCUA from liquidating the institution.
Washington argued the temporary restraining order, TRO, is necessary to "preserve the status quo and prevent the imminent liquidation" of the credit union, which was conserved in January because of unsafe and unsound practices. Chartered in September 2022, the $2.6 million People Trust Community opened for business in 2023.
In the emergency filing, Washington claimed the NCUA is "moving toward expedited liquidation, which would permanently eliminate the institution and render judicial review meaningless." He did not cite the source of that information and did not respond to a CU Times request for comment.
The NCUA also did not respond to a CU Times request for comment.
The federal regulator said the credit union's financial condition had rapidly deteriorated, citing a net worth of 3.12%, unrecognized costs and liabilities and significant Truth in Lending Act violations. The NCUA said it issued an order of conservatorship to preserve People Trust Community assets, protect the interest of its members and to protect the National Credit Union Share Insurance Fund.
Less than two weeks after People Trust Community was conserved on Jan. 16, Washington filed an application for relief from conservatorship in federal court. The filing alleged vendor system failures, NCUA examiner conflicts of interest, supervision inconsistencies, federal ethics violations and the undermining of Washington's executive authority. He asked the court for a stay of conservatorship actions pending judicial review.
In February, the NCUA moved to dismiss the application, arguing that only the credit union itself – through a valid board of directors resolution – can challenge an NCUA action.
"Since Washington filed his application as a member of the credit union but not as the credit union itself, he lacks standing to apply for relief … and his application must be dismissed for lack of subject matter jurisdiction," the NCUA stated.
The federal agency also said Washington's application should be dismissed because the credit union was conserved for its serious financial issues.
At the end of last year, People Trust Community posted a loss of $927,691 and a net worth ratio of -20.90% compared to a loss of $108,879 in 2024 and a net worth ratio of 7.75%, according to NCUA financial performance reports. In 2023, the credit union recorded a loss of $47,571.
In March, Washington filed an amended complaint, alleging the timing of events and communications submitted – including those submitted outside of the credit union's management process – raised questions about whether the regulatory review was undermined when the agency decided to conserve the credit union. He again asked the court to set aside the conservatorship decision for judicial review.
The NCUA also filed a motion to dismiss Washington's amended complaint, contending that even if Washington's allegations were true, the federal agency had lawful authority to order the conservatorship because of the credit union's declining financial condition.
On Monday, Washington filed a response to the NCUA's motion to dismiss his amended complaint, asserting a judicial review is necessary to assess whether the federal agency's actions were lawful.
READ MORE: Arlo Washington's Emergency Motion for a TRO.
Peter Strozniak can be reached at peter.strozniak@cutimes.com.
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