Credit Union 'Common Bond' Upheld

By Arndorfer, James B. | American Banker, September 16, 1994 | Go to article overview

Credit Union 'Common Bond' Upheld


Arndorfer, James B., American Banker


The National Credit Union Administration's liberal interpretation of the "common bond" that unites credit union members was upheld by a federal judge on Thursday.

"The NCUA's interpretation of the common-bond provision is a reasonable construction of an ambiguous statute," said U.S. District Judge John H. Pratt in an 12-page decision.

Judge Pratt handed down his decision less than a week after oral arguments in the four-year old First National Bank v. NCUA, which were held Sept. 9 in the U.S. District Court for the District of Columbia.

Bankers will appeal, vowed Michael Crotty, deputy general counsel for litigation at the American Bankers Association, which backed four North Carolina banks in the suit.

"Tell my friends on the credit union side to enjoy it while they can," he said. Judge Pratt said the common bond was intended to help foster the creation of credit unions, not to limit them.

"The common bond provision was not an end in itself, but its purpose was to support the underlying policy of promoting stable credit unions," he wrote. "It also suggests that Congress intended a flexible interpretation of the provision. This assumption is supported by the fact that Congress has not objected" to the agency's liberal interpretation of the statute, in effect since 1982. …

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