Court Reverse NCUA On Community CUConversion
SHERMAN, Texas - (08/18/05) A U.S. Magistrate ruledWednesday that NCUA was wrong in rejecting a bid by Community CU toconvert to mutual savings bank, nearly clearing the way for thelargest credit union conversion ever. In issuing his ruling.Magistrate Donald Bush said NCUA failed to prove that Community CUagreed to present the agencys required box disclosuresdetailing the affects of the conversion, before presenting thecredit unions own argument in favor of the conversion. Ineffect, Bush said the way the two-sided disclosures were foldedwere not regulated by NCUA, so should not serve as a basis for NCUArejecting the members affirmative vote to convert, anoverwhelming 72% vote. Theres nothing in theregulation that sets the order of submission of thedocuments, said the Magistrate, who added that Community CUcomplied with all of the applicable regulations in drafting andmailing three separate ballots to 90,000 members. Bush will sendhis findings and recommendation to the U.S. District Court Judge,who is almost certain to adopt it, thus freeing the $1.4 billioncredit union to switch to a bank. Community CU officials, notingthat the District Court itself must now rule on the issue, wereguarded. Well wait to see what happens, JamesMcCarley, chairman of the board, told The Credit Union Journal,after the Magistrates ruling.