Appeals Court Deals Blow to Missouri Bankers in Ongoing FOM Dispute

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A state appeals court issued a decision last week potentially ending the bankers' ability to appeal field of membership (FOM) expansions approved by the state regulator, when it affirmed a lower court ruling denying the bankers' standing to challenge credit union decisions.

The decision by the Missouri Court of Appeals in the Western District would effectively shut down the numerous challenges the bankers' have brought against the ever-increasing FOM expansions approved by the state's credit union division, unless it is overturned by the state's supreme court.

"I think the decision is significant because it established who has standing to bring these appeals," said John Smith, director of the credit union division whose FOM approvals the bankers have increasingly targeted over the past two years.

"I hope this latest ruling will settle the matter and allow credit unions to serve the citizens of this state unfettered by judicial proceedings," he stated.

The ruling could also have the affect of ending the bankers' ability to challenge FOM and other decisions issued by the state Credit Union Commission, which, based on the lower court ruling last year, also ruled the banks do not have standing to challenge its decisions.

The bankers, led by the Missouri Bankers Association, have filed appeals over the past two years in a least 15 FOM expansions, several of which have included broad communities exceeding one-million in population. The challenges, each time filed with a local bank as co-party, have had a chilling effect on some expansion bids, forcing several applicants to withdraw their requests, while others have agreed to scale back their desires to smaller FOMs. Still other credit unions are said to have been discouraged from applying for FOM expansions because of the possibility of an expensive and lengthy legal challenge by the bankers.

In the case before the appeals court, the credit union director and the state's CU Commission, which is dominated by credit union representatives, approved an expansion allowing Telecom CU (formerly known as Springfield Telephone Employees CU) to serve as many as 800,000 residents living within the 417 area code surrounding Springfield. The MBA, along with Century Bank of the Ozarks, appealed the decision to the CU Commission but was rebuffed. A state court in Cole County dismissed a subsequent court challenge without even hearing the case by ruling the bankers' didn't have standing to bring the challenge. That ruling was upheld last week by the appeals court.

Appeal To Highest Court

Officials with the MBA said they expect to appeal the case all the way to the state's highest court, as it will determine, once and for all, the ability of banks to challenge decisions and policies enacted for major competitors, an issue the federal courts have ruled the bankers have standing to challenge. "I believe we will appeal it to the supreme court of Missouri," said a top MBA official, who did not want to go on record until the group's executive committee makes the final decision.

He said there are still several issues to be resolved, including whether the federal deference to the banks standing should be respected in Missouri.

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