New Bankers Suit Puts UnderservedExpansions At Risk

WASHINGTON - (11/02/05) -- A new lawsuit filed by the AmericanBankers Association Tuesday challenging NCUA's policies on grantingunderserved field of membership expansions could put in jeopardydozens of expansions approved for federally chartered creditunions. In its suit, the ABA and four Utah banks claim NCUAviolated provisions of the Federal CU Act in approving severalunderserved expansions for America First FCU because the law barsunderserved expansions for community chartered credit unions,reserving them for multiple group credit unions. Edward Yingling,president of the ABA, noted that NCUA has allowed America First FCUto reenter and serve some of the same 'underserved' communities afederal court barred them from serving after invalidating a broadsix-county FOM granted the $3 billion credit union by NCUA earlierthis year. "This is being used as an end-run to the rules," saidYingling. In a sign of trouble, the new suit has been assigned tothe same judge, Dale Kimball, who ruled against NCUA in the earliercase. More recently, NCUA has begun approving the conversions ofcredit unions to community charters at the same time they aregranting underserved expansions. In September, NCUA allowed bothWanigas FCU, Saginaw, Mich., and WAVE FCU, Cranston, R.I., toconvert to community charter and to add an underserved community,at the same time. An NCUA spokesman said Tuesday the agency isreviewing the suits, including a seperate suit filed by the ABA,but the regulator is confident that the credit unions involvedfollowed NCUA's regulations and that the agency's regulations arein accordance with the federal statue. Officials at America FirstFCU did not return phone calls seeking comment.