NCUA Jumps The Gun, Liquidates First Virtual CU
ALEXANDRIA, Va. – NCUA said it won’t wait for tomorrow’s court hearing on the liquidation of tiny Kappa Alpha Psi FCU and has gone ahead and liquidated the $750,000 credit union serving the national African-American fraternity.
The NCUA announcement comes as lawyers and directors for the credit union were scheduled to meet tomorrow morning with NCUA lawyers to argue why the credit union regulator should hold off liquidating the six-year-old institution–even after the presiding judge questioned whether he has the legal authority to hold off NCUA.
“As liquidating agent NCUA has a statutory obligation to pay members their shares and give them access to their funds as soon as possible,” John McKechnie, chief spokesman for the agency, said this afternoon. Kappa, the first all internet-only credit union, was liquidated Friday, and the process of mailing checks to members began that day, he said.
The NCUA move comes as the Kappa lawyers were trying to stave off a full liquidation and the stigma it would bring the fraternity, and engineer a merger instead, into HOPE Community FCU of Jackson, Miss. But NCUA told the court there was no hope of resuscitating the tiny credit union and it was in the best interests of Kappa’s 1,341 members and the National CU Share Insurance Fund to liquidate the institution.
Lawyers for Kappa were unavailable for comment.