A federal judge reinfored the authority of National Credit Union Administration examiners to issue opinions on the quality and competence of credit union management last month when he dismissed lawsuits brought against the agency by two former credit union executives.
The suits, brought by the former manager and assistant manager of Hamilton Standard Federal Credit Union in Windsor Locks, Conn., contended that the men were illegally fired by the board of directors at the command of the examiners.
In dismissing the separate suits on Nov. 19, the judge -- in U.S. District Court for the District of Connecticut -- did not rule on the merits of the case, but only that there was no basis for the two former managers to bring charges. The charges included interfering with contractual rights.
Praise for the Decision
Allan Meltzer, chief of litigation for NCUA, hailed the court's decision.
"I think the court is signaling that NCUA can recommend that a board make changes in management, and if a credit union board changes management, that is an action taken by the credit union and not an action by the agencies," he said.
The suits were based on the firing of the two top officers of Hamilton Standard Federal Credit Union, Eugene F. Gallagher and Albert M. Ferretti, by the supervisory committee of the credit union in July 1991.
Both men claim their firing by the committee was undertaken at the direction of the NCUA and its examiners. The regulator denies that. But the issue was never settled because the case was dismissed.
Firing Isn't Part of Policy
It is the agency's policy not to direct the firing of any personnel by credit unions, Mr. Meltzer said. "Examiners don't say, |You have to fire the manager." They give an opinion on the competence of the personnel. It is up to the credit union's board or supervisory committee to act on that opinion," he said.
Mr. Meltzer said he hopes the judge's decision in the Hamilton Standard cases helps discourage other ousted credit union officials from suing NCUA's examiners in order to intimidate them.
"The judge's decision to dismiss these cases will help to discourage such harassment cases," he said.
"If our examiners are afraid that every word out of their mouth is going to lead to a lawsuit, then it is going to inhibit us from doing our job."
Several similar civil suits are pending against the agency where former credit union officials claim they were wrongly dismissed at he behest of NCUA examiners.
Just last month, the former manager of a Pennsylvania credit union who was fired in 1991 filed suit against the agency and an examiner over his ouster.