NCUA Bans Low-Income Expansions ForCommunity Charters
ALEXANDRIA, Va. - (01/02/06) In a tentative victory for thebankers, NCUA announced Friday it has withdrawn the authority ofAmerica First FCU to serve new low-income communities in Utah andimposed an immediate halt on the addition of low-income communitiesfor all non-multiple group credit unions. The action comes as afederal court in Utah is reviewing a legal challenge brought by theAmerican Bankers Association of NCUAs approvals of communitycharters to serve non-contiguous low-income communities, which thebankers say violates the Federal CU Act. The suit claims that onlymultiple group charters are allowed to add low-income communitiesunder the 1998 amendments to the FCU Act, known as HR 1151, the CUMembership Access Act. Whats more, the ABA claimsNCUAs action allowing America First FCU to serve certainlow-income communities was undertaken to skirt last yearscourt ruling barring the Utah credit union giant from serving asix-county community. Federal Judge Dale Kimball, the judge whoruled against NCUA and America First FCU last year, is reviewingthe latest suit over low-income additions. In a statement issuedFriday afternoon, NCUA said it believes it is prudent to rescindAmerica First FCUs low-income expansion and issue thetemporary moratorium on approving low-income expansions forcommunity chartered credit unions until the new court case isresolved.