WASHINGTON – Lawyers for Kappa Alpha Psi FCU insisted this morning they will continue to contest NCUA’s liquidation of their tiny credit union, even after NCUA has paid off all of its 1,341 members and is well on the way to completing the liquidation.
The issue now, according to Robert Cooper, a Washington lawyer and Kappa fraternity brother representing the credit union, is not over reconstituting the credit union but over the stigma a forced liquidation will leave on the nationwide African-American fraternity and future endeavors by small groups like his to form a credit union. “We want to do this on a voluntary basis, not with a gun to our heads,” Cooper told the Credit Union Journal during a break in the court proceeding.
NCUA told U.S. Judge Emmet Sullivan they proceeded to the liquidation last Friday–even before today’s scheduled show cause hearing on the action–after negotiations between NCUA General Counsel Robert Fenner and the Kappa Alpa chief, known as the Grand Poobah, failed to bear fruit. “The water’s over the dam,” Fred Haynes, a lawyer with the U.S. Department of Justice who is representing NCUA in the case, said of the liquidation process.
Judge Sullivan agreed to hear the appeal of the $750,000 credit union, the first internet-only credit union, even as he was preparing for a guilty plea and $298 million fine later this morning on Barclays Bank’s violation of U.S. financial sanctions on Iran, Cuba and other outlaw states. “This court has been very attentive to this controversy,” said Judge Sullivan, who doubted he could stop the NCUA liquidation action.
Even as the member payout was completed, NCUA lawyers conceded said the possibility of reconstituting the tiny credit union, as the member relationships and a portfolio of 41 loans totaling $400,000 still exist.
Judge Sullivan agreed to continue the case and scheduled additional briefings by both sides and a hearing for Oc. 15.
