Community Credit Union in Plano, Tex., has filed a lawsuit challenging the National Credit Union Administration's decision this month to invalidate its conversion vote because of concerns about how a disclosure document was folded.
The $1.4 billion-asset credit union announced Friday that it had filed its suit in the U.S. District Court for the Eastern District of Texas.
More than 71% of the 36,000 members who voted approved Community's plan to convert to a mutual savings bank, but Jane A. Walters, the NCUA's regional administrator, refused to certify the vote. She said the way the disclosure document was folded violated her agency's agreement with Community and its attorneys.
The suit claims the NCUA raised the folding issue as a pretense to keep Community from becoming a bank. The NCUA oversees the credit union industry's deposit insurance fund, which would lose $10 million of deposits if Community converted.
The Office of Thrift Supervision and the Texas Credit Union Department also reviewed Community's conversion application, and they approved it.
