NCUA Between A Rock And Hard Place OnUnderserved Rule

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ALEXANDRIA, Va. - (05/03/06) – The NCUA Board is being facedwith a proper dilemma in drafting proposed amendments to itsunderserved expansions policy, currently under challenge in thecourts. In its vote later this month, the panel is expected toformalize a rule that will restrict its underserved expansions tomultiple group credit unions. But the question is: will the morethan 200 community charters already allowed to add underservedcommunities be allowed to retain the 1.5 million members andbillions of dollars in new loans and deposits they have addedthrough the challenged policy? The American Bankers Association,which has been negotiating with NCUA to drop its Utah suit, hasindicated that it will not accept a grandfathering of theexpansions, which the bankers assert violates provisions of theFederal CU Act restricting underserved expansions to multiple groupcredit unions. The bankers, who have challenged a singleunderserved expansions granted America First FCU In Utah, couldchoose to challenge the legality of every one of the expansionsgranted 200 or so community charters, too. Compounding the dilemmais the fact that the federal judge in Utah, Dale Kimball, is thesame judge who ruled NCUA violated the law in granting a six-countycommunity charter to four different credit unions.

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