JACKSONVILLE, Fla. – Saying it is tired of being “abused” by NCUA, one small credit union here is preparing what it plans to become a class-action lawsuit against the federal regulator.
Jacksonville Fireman’s CU is planning to file litigation against NCUA over the special assessments charged to natural-person institutions to pay for corporate credit union failures.
“We feel like the NCUA has been negligent and derelict of their duties as far as the oversight of the corporate credit unions,” Executive VP Thomas Smith said, arguing that corporates should be forced to carry the burden over the long-term. “When they become profitable again they should have to reimburse us for the assessments.”
The $31-million credit union turned to its pension fund lawyer, who is working at a reduced rate, to prepare a legal strategy. After a small handful of other credit unions across the country filed individual suits against the regulator – the suits initially were filed against WesCorp and U.S. Central, before NCUA replaced them as defendant by virtue of the conservatorship of the institutions – Smith said it was decided a class-action suit was a better legal strategy.
Smith was particularly upset that Jacksonville Fireman’s CU was charged a $300,000 assessment last year, which ate into its $4-million capital cushion and is facing additional assessments this year despite remaining a well-run and safe institution. “We feel like we’re being abused,” he stated.
Smith noted that he has spoken to at least 10 other credit unions in the region, all of which indicated they’re supportive of the action. He’s hoping to bring many other CUs on board with the class-action litigation and get the item on the agenda of the League of Southeastern Credit Unions’ annual meeting this summer in Orlando.
