CUNA looks beyond NCUA/CCU settlement

WASHINGTON (9/1/05)—An official of the Credit Union National Association (CUNA) said Wednesday that the trade group understands why the National Credit Union Administration (NCUA) has taken the step to settle a lawsuit filed against the agency by two Texas credit unions, Community Credit Union, of Plano, and OmniAmerican Credit Union, of Fort Worth.

CUNA General Counsel Eric Richard said, " With this development, we can now look to the future and focus on the most critical issue – protecting the interests of consumer/members of credit unions."

Richard added it is important to remember that the agency's rules governing charter conversions from credit union to mutual savings bank are still in place.

"We at CUNA look forward to working with the agency to address any outstanding issues and to protect credit union members."

As part of the settlement of the case, Richard said, the magistrate judge's recommendation to the federal district court judge, which was critical of NCUA's conversion rules, is likely to be withdrawn.

For the terms of the settlement agreement to become final, Richard noted, the federal district court judge must approve the settlement. He said since both sides agreed to the terms, that approval is likely to be forthcoming.

The agreement involving the NCUA, Community, and OmniAmerican provides that the NCUA will approve the membership votes at both institutions on their proposed conversions. The credit unions, in turn, will drop their legal challenges to NCUA regarding these actions. And, as noted, the magistrate judge who heard the arguments in the case, Don Bush, will vacate his decision and recommendations.

NCUA Chairman JoAnn Johnson said, when announcing the agency's decision to settle, that even though NCUA believes there are valid objections that could be raised in response to the Report and Reommendation of the court, "we also believe settlement of this lawsuit is the best way to quickly resolve this matter."

"This lawsuit has served to bring into clear focus several issues regarding our regulatory procedures, particularly the need for full and fair disclosures to members," said Johnson.

She added that "NCUA will continue to evaluate our regulations and processes to make certain that we satisfy our Congressional mandate to administer the member vote properly when a credit union seeks to convert to a mutual savings bank."