ARLINGTON, Va. - The board of the National Association of State Credit Union Supervisors said it plans to appeal a court case it lost to the federal government.

The association, which represents both state regulators and state- chartered credit unions, filed a notice of intent to appeal on Oct. 25 with the U.S. Court of Appeals for the Fourth Circuit.

The trade group, along with the Credit Union National Association, earlier this year sued the federal government for passing a rule that would ban shared management between associations and corporate credit unions.

The two associations argued that the National Credit Union Administration trampled over states' rights by dictating the governance structure of state-chartered institutions.

But the U.S. District Court for the Eastern District of Virginia on Sept. 25 ruled that the NCUA had legitimate reason, based on safety-and- soundness concerns, to issue the regulation.

The CUNA decided not to pursue the suit, partly because some of its leadership opposed it from the beginning and partly to cool down acrimony with the regulator.

But the state supervisors' group said it believes the issue is worth a continued fight.

"Our lawyers have concluded that the opinion is poorly written, that it fails to consider several Supreme Court decisions which are specifically applicable to this issue, and that an appeals court will likely reverse the district court," chairman Gary Mielock wrote in an Oct. 23 letter to association members. Mr. Mielock is a deputy commissioner in Michigan's Financial Institutions Bureau.

The group's president, Douglas Duerr, said it now is soliciting feedback from members, and depending on the reaction, may not pursue the suit.

But "so far the membership seems to be saying, move ahead with an appeal," Mr. Duerr said.

NCUA Chairman Norman E. D'Amours declined to comment, saying, "We've put that behind us."

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