League: State law gives Michigan CUs an FOM alternative

PLYMOUTH, Mich. (7/30/08)--A Pennsylvania court decision earlier this month regarding field of membership issues in the state re-emphasized what credit unions in Michigan have to be thankful for, according to the Michigan Credit Union League (MCUL).

"This roadblock for the Pennsylvania credit union wishing to expand its charter is a clear contrast to the flexible fields of membership enjoyed by Michigan state-chartered credit unions, thanks to the updated Michigan Credit Union Act (MCUA)," said MCUL Executive Vice President Patrick La Pine.

"Credit unions in Michigan have an alternative to dealing strictly with federal laws regarding this kind of expansion, and in a case like this wouldn't have requirements for common bond," he said (Michigan Monitor July 28).

"The battle for modernization of the MCUA was a long one, but five years later Michigan credit unions can still look back and realize it was certainly worth the effort," he added.

The Michigan Credit Union Act was updated in 2003 after nearly three years of work by Michigan credit unions and the MCUL, the league said.

The Credit Union National Association (CUNA) expressed disappointment July 21 on the federal court ruling that the National Credit Union Administration's (NCUA) record was not sufficient to sustain its decision granting a six-county area community credit union expansion in Pennsylvania (News Now July 22).

The decision, issued by Chief Judge Yvette Kane for the U.S. District Court, Middle District of Pennsylvania, involved a lawsuit filed by the American Bankers Association and the Pennsylvania Bankers Association. CUNA pledged to begin work immediately to help credit unions deal with the judge's order.

The bankers argued that the NCUA acted in an arbitrary and capricious way in 2003 when it approved Harrisburg, Pa.-based Members 1st FCU's charter request. The agency decision was later used as basis to authorize two other charter expansions for two other Pennsylvania credit unions, New Cumberland FCU and AmeriChoice FCU.

The court concluded that "under all the circumstances, the decision of the NCUA is arbitrary and capricious and must be set aside." The court determined that "after a careful review of the record, that the NCUA's analysis is insufficient in this case..."