A federal appeals court handed the banking industry a huge victory Tuesday when it ruled that credit unions have been illegally accepting new members.
The U.S. Court of Appeals for the District of Columbia said that "all members of a federal credit union must share a common bond."
The case was filed in 1990 by five North Carolina banks and the American Bankers Association. It claimed that the National Credit Union Administration erred by allowing AT&T Family Federal Credit Union to accept as members people who work for other companies.
Employees at 150 companies in 50 states are members of AT&T Family - a situation the appeals court said violates the law requiring credit-union members to share a common bond.
"The court landed right where it should have - on the large credit unions that have chosen to ignore the clear legislative intent," said James M. Culberson Jr., ABA president and chairman of First National Bank and Trust Co., Asheboro, N.C.
The case could have far-reaching results, because thousands of occupation-based credit unions accept employees of other companies as members.
"This is Hiroshima," said Michael F. Crotty, ABA deputy general counsel for litigation. "It should bring to a sudden end a very long war that we have been waging."
NCUA officials did not get the decision until late Tuesday and could not comment on it.