Missouri FOM Case CouldReverberate

JEFFERSON CITY, Mo. - (03/31/06) – A state court ruling strikingdown the state’s field of membership rule could have broadramifications around the country as two federal courts begin todeliberate the FOM issue, one, in Pennsylvania, over similarissues. In its decision, the Cole County Circuit Court struck downmany of the constricts that have allowed credit unions, both stateand federally chartered, to establish ever broader areas communityFOMs. The court overruled the authority of the state’s CUCommission, made up by a majority of credit union executives, todefine what would be considered a valid geographic area forpurposes of setting an FOM and asserted that boundaries accepted bythe Commission, such as counties, townships, zip codes, telephonearea codes and even cities do not qualify under the state'sstatute--which is based on NCUA's--to delineate community FOMs. Infact, Judge Richard Callahan said the broad community grantsawarded the state chartered credit unions did not fit thedefinitions of "well-defined," "local neighborhood" or "ruraldistrict," on which both the federal law and the state's, adoptedin 1998 just before the passage of HR 1151, the CU MembershipAccess Act, rely to approve community FOMs. The ruling comes as afederal court in Pennsylvania is deliberating on whether NCUAviolated the federal statute in granting a broad six-countycommunity charter for two local credit unions. In a separate case,a federal court in Utah is also reviewing whether NCUA violated thelaw in granting underserved expansions to community charteredcredit unions.