Pennsylvania's Banks Latest To Protest FOM Changes

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Banks in Pennsylvania have stepped up their efforts to restrain credit unions, and CUs here may need to brace themselves for more of the same in the future if the recent banker protests of CU community expansions are any indication.

"We were initially aware of the protests filed by banks against two of the larger credit unions in Philadelphia [which had filed to convert to community charter under the state's parity laws]. While we have always maintained that banks have no right to interfere in the credit union regulatory process, we could sort of understand why they might go after a big target, if you will," said Mike Wishnell, SVP-Communication for the Pennsylvania CU Association. "But recently they went after a $12-million credit union-a tiny, little credit union that is just trying to survive, and that suggests they may be protesting like this more in the future."

Currently, three credit unions' community charters have been delayed by the bankers' tactics: Freedom Credit Union, Philadelphia; TruMark Financial Credit Union, Trevose, Penn., and Corry Jamestown Credit Union, Corry, Penn.

All three were seeking to convert to community charters under authority granted them by Pennsylvania's State Credit Union Parity Act, which was passed in 2002. According to the Pennsylvania league, the protesting banks seek to compel a hearing on the merits of the community charter conversions and to assert that the credit unions have not sought a "well-defined, local, community, neighborhood, or rural district," as defined by state, federal law and NCUA.

What's Being Sought

Freedom Credit Union is seeking a community charter consisting of Bucks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as three counties in New Jersey. TruMark Financial is seeking the Pennsylvania counties of Bucks, Chester, Delaware Montgomery and Philadelphia. Corry Jamestown is seeking a community charter that would consist of Erie County, Penn.

"Our Association strongly supports the right of all of these credit unions to convert to community charters and for those charter amendments to be considered by the Banking Department without banker interference," said Jim McCormack, Association President/CEO. He also noted that by obtaining community charters, these credit unions would be better positioned to serve those that are unbanked or underserved, customers the banks clearly have no desire to serve.

"I wouldn't characterize the relationship here between banks and credit unions as miserable, but there is always a bit of contention between them," Wishnell said. "It's not unusual that the banks would try to sort of limit competition and use the regulatory apparatus to do so."

The contesting parties include the Pennsylvania Bankers Association, Pennsylvania Business Bank, Univest, The First National Bank and Trust Company of Newtown, the New Jersey Bankers Association, NOVA Savings Bank, Leesport Bank, The Bank, The Lafayette Ambassador Bank, First National Bank of Chester County, Fulton Bank and Northwest Savings Bank.

The regulator has extended the comment period in these cases, but it is still unknown whether the agency will slate hearings on the charter changes or simply move forward with its determination.

"Eventually, an administrative decision will be made, and it could end up in commonwealth court," Wishnell said.

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