ALEXANDRIA, Va. – A federal court today dismissed a legal challenge to NCUA’s rules on credit union conversions to banks brought by a shadowing group apparently affiliated with banks.
The U.S. District Court for the Eastern District of Virginia found that the Coalition for Credit Union Charter Options lacked standing to bring the suit because it failed to prove that any of its members are in danger of being harmed by the rules, amended by NCUA over the past three years several times to make the switch to bank more difficult. In addition, the court ruled that the group failed to show that any of its members have plans to convert to banks or that the NCUA regulation would prevent them from doing so.
The group insists that it has the support of credit union representatives but it refuses to divulge its supporters. It was represented in court by well-known banking lobbyist James Butera, who represents the American Bankers Association, and is headed by Lee Bettis, the former CEO of a credit union that converted to mutual savings bank.
The group, which has been encouraging credit union conversions to banks, argued in court that NCUA’s thrice-amended regulations on conversions violate provisions of HR 1151, the 1998 CU Membership Access Act–which Butera helped write–that requires NCUA to adopt rules on charter conversions that are no more strict than those set by the Office of Thrift Supervision and other banking regulators.
