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News Now

Washington
Judge inclined to uphold Vensure conservatorship
WASHINGTON (5/11/11)--U.S. District Court for the District of Columbia Judge Rosemary Collyer Wednesday said that she is initially inclined to rule in favor of the National Credit Union Administration (NCUA) and let its conservatorship of Vensure FCU stand but will consider an additional written filing by the credit union before making a final ruling. On April 15, the NCUA placed the Mesa-Ariz. credit union into conservatorship after it had failed over time to diversify its business. The NCUA determined the credit union relied solely on income from processing online gambling transactions to survive, and the agency had recommended it build a loan program. Although Vensure took steps to build such a program, it did not have any loans at the time that the U.S. Attorney for the Southern District of New York indicated it would freeze a multi-million dollar online gambling account that was used to cover rejected ACH transactions. The NCUA was concerned, records show, that the credit union could not survive independently if it had to cover rejected ACH transactions from its retained earnings, especially because it did not have any other lines of business that could support its operations. The court convened yesterday to hear arguments regarding a request to the court by Vensure to enjoin the NCUA’s April 15 conservatorship. The credit union has argued, in part, that the NCUA "took possession of the very financial records [the credit union] needs to demonstrate that conservatorship is improper." The case is known as Vensure Federal Credit Union v. National Credit Union Administration. In her comments, Collyer underscored that over the remaining course of the trial her sentiments could change, but she said that the facts presented to date make her currently inclined to uphold the conservatorship and rule that the NCUA was not “arbitrary and capricious” in its action, as the credit union has charged. She said she would allow Vensure one week to file a written response, and would give the NCUA a week after that to reply to the credit union’s filing.


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