In a filing with the Supreme Court Friday, the American Bankers Association unveiled new ammunition for the industry's fight to limit credit union membership.
The legal battle-pitting several North Carolina banks against AT&T Family Federal Credit Union-has been raging since 1990. Still, ABA unearthed new evidence to convince the Supreme Court to require members of occupation-based credit unions to share a single common bond.
The ABA brief digs up a 1982 amendment to the Federal Credit Union Act that allowed the National Credit Union Administration to merge ailing credit unions into healthier institutions-even if the two did not share a common bond.
By showing that Congress made an exemption from the common bond limits for sick credit unions, the ABA hopes to convince the Supreme Court that the NCUA is violating the law by allowing healthy institutions like AT&T Family to accept members from unrelated companies.
ABA's 51-page brief quotes former NCUA Chairman Lawrence Connell as telling the Senate Banking Committee in 1981 that without the exemption "we can't combine credit unions with unlike fields of membership."
The brief also quotes Roy F. Bergengren, a pioneer of credit unions, as answering questions from a senator at a 1934 hearing. The lawmaker asked whether a credit union "must be composed of people employed by the same company." Mr. Bergengren answered "yes."
ABA notes that 65% of AT&T Family members work for companies that have no affiliation with the long-distance provider.
The Supreme Court is expected to hear oral arguments in the case this fall.
The justices must decide whether the U.S. Court of Appeals for the District of Columbia Circuit erred in July 1996 when it ruled that members of occupation-based credit unions must share a single common bond. (The U.S. Court of Appeals for the Sixth Circuit came to the same conclusion in a similar case last April.)
NCUA spokesman Robert Loftus said Friday that the agency would not respond to the ABA's arguments until Aug. 11 when its reply brief is due at the Supreme Court.
In previous briefs, the NCUA has argued that the law limits membership in federal credit unions to "groups having a common bond of occupation or association." The agency interprets this to mean that multiple, unrelated groups of employees may belong to the same credit union as long as there is a common bond among members of each group.
In its brief, the ABA noted that during oral arguments before the appeals court, NCUA lawyers "reluctantly admitted" that this policy would allow the agency "to charter any credit union to admit into membership every employee of every company in the United States."