Credit unions unwilling to wait on the slow wheels of government are already turning to "plan B" for membership expansion.
Neither the Supreme Court nor Congress is expected to resolve before 1998 whether federal occupational credit unions may serve employees at more than one company, so many credit unions are hedging their bets by switching to more permissive charters.
Since July, 134 credit unions have asked the National Credit Union Administration for permission to switch to a community-based charter while 66 have applied to convert to state charters.
The spate of applications was spurred by a July 30 appeals court decision in the AT&T Family Federal Credit Union case that occupation-based federal credit unions may not accept members from unrelated companies.
Most states permit occupation-based credit unions to serve employees at multiple companies; community charters cover broad populations such as all residents and workers in a county.
While the July decision was under appeal, Corporate America Family Credit Union, Elgin, Ill., converted to a state occupational charter Jan. 1, according to president Richard K. Wellner.
"If there is almost no downside, then why not?" he asked. "We can continue to do what we have been doing for the last 50 years without the threat of a national lawsuit against NCUA forcing us to curtail our business."
NCUA Chairman Norman E. D'Amours said he assumes many pending charter applications are driven by like motivations. (So far, NCUA has approved six of the requests to switch to a community charter and 31 conversions to state charters.)
Credit unions naturally want to protect their membership bases and ensure long-term economic viability, he said, adding that a credit union's motivation for charter conversion does not affect the NCUA's decision.
"I find it irrelevant ... as long as they meet the standards we have traditionally used," Mr. D'Amours said.
In reviewing conversions to community charters, NCUA checks primarily whether a credit union is financially sound, has served its members well, and whether the expansion would unduly encroach on another credit union's market, officials said.
Nevada Federal Credit Union in Las Vegas has completed the steps to switch to a state occupational charter, pending a membership vote.
"It's ready to go should we need it," explained president Bradley W. Beal. "As long as we can continue to serve our current employers, we prefer to wait on the Supreme Court ruling."
Changing charters, however, requires significant paperwork and is not cheap. According to Mr. Beal, Nevada Federal would have to spend several hundred thousand dollars on a name change (the word "federal" would have to go) and contend with members' confusion.
But many credit unions are driven by factors unrelated to the appeals court decision, such as sagging local economies. From Mississippi to California, occupational credit unions that were sponsored by manufacturing and military employers that are being downsized need new members fast.
Point Mugu Federal Credit Union, Oxnard, Calif., applied in March 1996 for a federal community charter because of the dwindling work force at the naval weapons testing center that had spawned the credit union nearly a half century earlier.
"We looked pretty smart" after the court decisions against credit unions later in the year, president Ronald L. McDaniel said. In late January, NCUA gave the 32,000-member credit union the go-ahead to serve all 700,000 inhabitants of Ventura County.
At yearend, of roughly 11,600 credit unions, about 3,600 held federal occupation-based charters.
