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Washington
Court dismisses conversion suit against NCUA
WASHINGTON (12/13/07)—A federal court ruled Wednesday that the Coalition for CU Charter Options lacked standing to bring suit against the National Credit Union Administration (NCUA) and dismissed the case challenging the agency’s rules on credit union conversions to banks. Credit Union National Association (CUNA) President/CEO Dan Mica proclaimed the court’s decision “good news for consumers” and said his group was not surprised by the outcome of the lawsuit. The U.S. District Court for the Eastern District of Virginia found that the Coalition failed to show that any of its members were directly damaged or affected by the NCUA’s new conversion rules and thereby the group had no “standing” to bring a lawsuit challenging the agency’s actions. The ruling, Mica said, “ensures that the federal agency that best understands credit unions and their commitment to their members continues to have authority over the conversion process of credit unions to another type of financial institution.” “We had been optimistic that this challenge to the agency’s rule and authority would fail given the fact that the case did not provide evidence of injury to the plaintiffs. “We concur with this outcome, commend NCUA for its rulemaking, and continue to believe that credit union members deserve transparency and openness when they are faced with a tough decision about whether their credit union should convert to another form of financial institution,” Mica added. The CCUCO lawsuit was brought against the NCUA in July and the plaintiff sought to have the court overturn the agency’s conversion rule as invalid and arbitrary. The coalition challenged the rule on the grounds that it was inconsistent with the Federal Credit Union Act which requires that the NCUA's conversion regulation to be consistent with that of other financial regulators, such as the Office of Thrift Supervision and the Office of the Comptroller of the Currency. In its short published opinion, the court concluded that NCUA has authority to regulate conversions. It also stated that the Coalition had not shown that any of its members were harmed by the regulations or that any of its members have immediate plans to come under the rules through a conversion application.


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