Court May Reconsider Crucial Ruling Limiting Eligibility for Credit

A federal appeals court in Washington might reconsider its landmark decision limiting credit-union membership to employees of a single company.

Last week, the U.S. Court of Appeals for the District of Columbia Circuit ordered the American Bankers Association and four North Carolina banks to file a brief explaining why the entire court should not review the July 30 ruling.

The court requires parties to file briefs only when it is seriously reconsidering an earlier decision.

A decision to reconsider the ruling would give the credit-union industry its first victory in a two-month campaign to reverse the court's decision. The court has rebuffed the industry's prior efforts.

"This is a positive development," said Robert M. Fenner, general counsel at the National Credit Union Administration. "It is a sign our petition for rehearing has raised questions with some people on the court. We are very pleased."

"This is a really good sign," agreed Patrick Keefe, spokesman for the National Association of Federal Credit Unions. "Usually the appellate court doesn't go that far if it hasn't made a decision to really take a close look at this thing. This is very encouraging."

Banking industry officials downplayed the ruling.

"We are not nervous," said ABA general counsel John Gill. "The court is just following its normal course of procedure and we will comply with it."

A three-judge panel of the appeals court ruled this summer that NCUA violated the law by allowing AT&T Family Federal Credit Union in Winston- Salem, N.C., to accept employees from more than 150 unrelated companies.

It said federal law requires all members of an occupation-based credit union to share a single common bond. The ruling, if upheld, could lead to the dismantling of up to 2,000 occupation-based credit unions.

NCUA filed a motion Sept. 13 asking the appeals court to reconsider the decision. The ABA must file its response by Oct. 4. A ruling is expected in late fall.

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