Academic journal article ABA Banking Journal

Credit Unions: Adding Truth to the Mix

Academic journal article ABA Banking Journal

Credit Unions: Adding Truth to the Mix

Article excerpt

Architect Frank Lloyd Wright once observed that "the truth is more important than the facts." Shedding a little truth on the credit-union issue may help us all sort through some of the "facts."

Trouble is, the impassioned, often inaccurate, arguments of the credit union Industry threaten to make truth the victim. I am always amazed to read how the credit unions, trade associations manage to garble our Industry's position. We are, they charge, out to end the credit union movement as we know it today. Armageddon awaits, in their view. As evidence, they point to First National Bank and Trust Company et al v. NCUA, ABA's six-year-old law suit against the National Credit Union Administration. This case, they say, proves that bankers want to do away with credit unions.

What the case proves, of course, is that we want credit unions and their regulator to obey the law. But this lawsuit is most assuredly not about a hidden agenda of banks to do away with credit unions, which play an important financial role in the lives of many Americans. We have no interest in changing that. Our argument is with those credit unions that want to become banks, without the responsibilities of banks.

After six years of litigation, we have succeeded in convincing the courts that the NCUA's routine practice of approving charter expansions for employee-based credit unions is illegal. That decision was made loud and clear on July 30, 1996, by the U.S. Court of Appeals for the District of Columbia. Membership in a federal credit union by groups that do not share a single common bond of occupation with all other members is unlawful.

The decision was further upheld by the District Court. And in a status conference in early December, U.S. District Judge Thomas Penfield Jackson denied an NCUA motion for a stay of his earlier injunction barring additional credit union expansions. He further granted a motion filed jointly by ABA, the Independent Bankers Association of America, and America's Community Bankers for immediate enforcement of the injunction. Needless to say, the legal maneuvering probably hasn't ended. The case will almost certainly wind up In the U.S. Supreme Court. But for now, the courts have solidly upheld our position.

As a multiple common-bond credit union, AT&T Family is not an exception. ASI Federal Credit Union in Westwego, La., for example, represents more than 1,000 employees groups, from hair salons and horse farms to a casket company. …

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