The nation's largest credit union has quit the Credit Union National Association.

Navy Federal Credit Union jumped ship last week after the industry's leading trade group refused to withdraw its lawsuit challenging a rule eliminating shared management between CUNA and corporate credit unions.

CUNA sued the National Credit Union Administration on Feb. 3, charging the agency failed to show reason why the regulation was necessary.

The loss of Navy Federal's $73,000 in annual dues hardly dents CUNA's $31 million budget. However, losing Navy Federal and several other members could diminish the association's clout.

Navy Federal is the fourth credit union to abandon CUNA this year, joining Pentagon Federal Credit Union, Security Service Federal Credit Union, San Antonio, Tex., and Pan Am Horizons Federal Credit Union, Miami.

Tom Hughes, chief executive of the $8.4 billion-asset Navy Federal, said he tried to persuade CUNA leaders to withdraw the lawsuit.

After giving the trade group 10 business days' notice, Mr. Hughes said he believed the Madison, Wis., association might budge from its position.

"The gist I was getting was they might be pulling" the lawsuit, he said. "The bottom line is, they must've decided that despite the different input they've been getting - and they've been getting a lot of that - they'll be going forward."

Mr. Hughes said the regulation to sever management ties between the association and the corporates is a good idea. CUNA's legal challenge of NCUA hurts the industry's image, he added.

It's uncertain whether the Merrifield, Va., organization will rejoin after the lawsuit is over.

"I don't know," Mr. Hughes said. "If it comes to an end and there's no negative impact on credit unions, we might join back up. But it still hangs over our head (that) we couldn't get much attention."

Mr. Hughes also criticized the trade group's structure as bureaucratic. Credit unions aren't direct members of CUNA. Instead, credit unions join leagues, which in turn make up CUNA.

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