NCUA gets extension in Kappa Alpha Psi case

WASHINGTON (9/1/10)--The National Credit Union Administration (NCUA) has been granted a three-day extension to file its renewed response in Kappa Alpha Psi FCU's lawsuit contesting its liquidation before a U.S. District Court for the District of Columbia.

Originally NCUA was to file its renewed response to a "show cause" order by Aug. 30. However, NCUA's counsel Fred E. Haynes requested a three-day delay to Sept. 2, citing that other litigation took longer than expected, according to court documents.

The credit union consented and the extension was granted Tuesday by Judge Emmet G. Sullivan. The show-cause reply will be due tomorrow. The plaintiff credit union's plaintiff's reply deadline will move to Sept. 20 from Sept. 15. That means NCUA's new deadline to file its sur-reply to the credit union's reply will move to Sept. 24 from Sept. 22, according to the documents.

The hearing for the order to show cause is scheduled for Oct. 15. There NCUA is expected to show cause why it liquidated the Texas-based credit union.

NCUA ordered the liquidation of the $750,000 asset credit union on Aug. 3 and formally carried out the liquidation orders Aug. 13 while the credit union's request for an injunction was being brought to court. The credit union dropped the injunction after NCUA redistributed its assets to its former members (News Now Aug. 19 and Aug. 18).

Kappa Alpha Psi claims the liquidation was unjust and that its net worth ratio was affected by "full accrual accounting" and NCUA's assessments related to its Temporary Corporate Credit Union Stabilization Fund.

NCUA has said the liquidation was the result of the credit union's inability to generate consistent operational profits, build its net worth position, maintain its records in a sound manner, grant quality loans and adequately collect on delinquent loans (News Now Aug. 19).

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