Magazine article American Banker

Docket: High Court Highlight: Credit Union Dispute

Magazine article American Banker

Docket: High Court Highlight: Credit Union Dispute

Article excerpt

With the exception of the credit union case, the Supreme Court term that wrapped up last month was largely a bust for the banking industry.

For the second consecutive year, few cases involving banks, securities firms, and insurers made it to the high court, and those that did involved peripheral issues that have little effect on the industry's day-to-day operations.

"This term was just one huge, huge case and then not much else," said Michael F. Crotty, deputy general counsel for litigation at the American Bankers Association. "Next year doesn't look much better."

"Things were rather mundane," said Richard M. Whiting, general counsel at the Bankers Roundtable. "There were not any really significant banking cases."

This is a dramatic change from the late 1980s and early 1990s, when the Supreme Court was often the final arbiter of whether banks could enter new businesses. Key decisions, including the Valic and Barnett Banks rulings, opened the doors for banks to sell annuities and insurance.

The most significant ruling of the term was clearly the so-called AT&T Family Federal Credit Union case, in which the ABA challenged the authority of the National Credit Union Administration to let occupation-based credit unions serve employees at unrelated companies.

The credit union industry charged that the ABA lacked a legal right to challenge NCUA decisions and said the regulator correctly interpreted the law to allow multiple common bonds. The justices rejected both arguments, ruling 5 to 4 on standing and 5 to 0 on the NCUA's interpretation of the law. (The four who concluded that the banks lacked standing did not vote on the interpretation.)

The banks' victory, however, looks short-lived. The House approved a bill in April that would overturn the ruling and permit multiple common bonds. …

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