Judge Stands by His Ruling On Credit Union Eligibility

Responding to a request by the National Credit Union Administration to clarify his Oct. 25 ruling, U.S. District Judge Thomas P. Jackson said Thursday that occupation-based credit unions may not add customers who lack a common bond with the institutions' core membership.

"They cannot continue to enroll new members who are members of disparate groups, regardless of when they were enrolled," Judge Jackson said from the bench.

The judge did hand the credit union industry a small victory.

He said credit unions may add new companies to their fields of membership provided they share a common bond with the core members. This would allow a credit union to serve employees at a subsidiary recently acquired by its corporate sponsor.

Officials of the credit union industry said they would keep trying to overturn or weaken the order, which implements a July 30 decision by the federal appeals court in Washington.

That court found that the NCUA violated federal law when it allowed AT&T Family Federal Credit Union to serve employees at more than 150 companies. It said credit union members must all share a single, common bond.

"We are disappointed," NCUA General Counsel Robert M. Fenner said. "We think the injunction goes further than it has to."

But Michael Crotty, deputy general counsel for litigation at the American Bankers Association, said he wasn't surprised by the decision. "They understood the original injunction and so did we," Mr. Crotty said.

Mr. Fenner urged credit unions not to overreact.

"Our advice to credit unions is to remain calm," he said. "We will prevail when all is said and done."

Patrick Keefe, a spokesman for the National Association of Federal Credit Unions, said his group expects the federal appeals court in Washington to soften Judge Jackson's order. "We are going to keep pursuing this," he said.

"We expected this," added Brenda Furlow, acting general counsel to the Credit Union National Association. "But we were hoping we were wrong."

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