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CU parties statement on relief in FOM case
WASHINGTON (9/9/08)—A coalition of interested credit union parties filed a statement with a U.S. district court regarding an appropriate relief plan in a case that challenged a National Credit Union Administration’s (NCUA) decision to grant a six-county area community credit union expansion in Pennsylvania. In July, the U.S. District Court for the Middle District of Pennsylvania ruled that the NCUA’s record was not sufficient to sustain its decision and ordered the plaintiff American Bankers Association and defendant NCUA to suggest a remedy to the court. In its lawsuit against the federal regulator, the bankers argued that the NCUA acted in an arbitrary and capricious way in 2003 when it approved Harrisburg, Pa.-based Members 1st FCU's charter request. The agency decision was later used as basis to authorize two other charter requests, one from New Cumberland FCU and the other from AmeriChoice FCU. In a statement on appropriate resolution to the case, the Credit Union National Association (CUNA), Pennsylvania Credit Union League and other credit union parties made points for the record regarding the remedy negotiated by the NCUA and ABA. As part of the agreed upon order, the affected credit unions will revert to the select employee group and associational charters that they held prior to the community charter expansions. Also as part of the agreement, all members who joined the credit unions under the community charters may remain as members. Although the ABA, in its brief, did not ask that the credit unions involved divest the members who were added under the NCUA decision, the credit union parties noted that the case should not serve as a precedent that the consent of the bankers “or similar plantiffs” is required for that outcome. Also, the credit union parties said that although the court’s final order is silent on the issue, the entire matter should be remanded to the NCUA to take further actions as may be appropriate. The credit unions named in the lawsuit and the National Association of Federal Credit Unions were also parties to the credit union statement on appropriate relief. Since most issues have been agreed upon, the judge likely will decide whether to accept the proposed order in a relatively short time—possibly within several weeks.


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