After suffering repeated legal losses, the government today is expected to ask that limits on credit union membership be lifted until the Supreme Court decides whether to hear the case.
The National Credit Union Administration will ask the U.S. Court of Appeals for the District of Columbia to suspend its decision to bar occupation-based credit unions from adding customers who don't share a bond with core members.
"Given the reverses NCUA and credit unions have suffered in the district court, we believe the best way to gain relief is to pursue a stay with the court of appeals," NCUA Chairman Norman E. D'Amours and directors Shirlee Bowne and Yolanda T. Wheat wrote in a Dec. 6 letter to federal credit unions.
"While this appeal is pending, NCUA will continue to work on other remedies - judicial, regulatory, and legislative," they wrote.
On Dec. 4, U.S. District Court Judge Thomas P. Jackson overturned an interim NCUA rule that allowed credit unions created for the employees of one company to enroll all employees in a particular trade, industry, or profession.
Judge Jackson also ordered 126 credit unions that have taken advantage of the new rule, issued Nov. 14, to convert back to their original charters. In the letter, the NCUA said credit unions may keep any members added during the three weeks the regulation was in effect.
Banking industry representatives predicted that NCUA's request for a temporary stay would be denied by the appeals court. John J. Gill, the American Bankers Association's general counsel, based his forecast on the fact that the appeals court has already denied an earlier NCUA request for a rehearing of the case.
"The appeals court had an opportunity to stay this before and did not," Mr. Gill said. "We would think the court still sees it the same way."
In its July 30 decision, the federal appeals court found that NCUA violated federal law when it allowed AT&T Family Federal Credit Union to serve employees at more than 150 separate companies.
The decision could affect 3,586 occupation-based federal credit unions.
NCUA's appeal to the Supreme Court was filed Nov. 26. The agency expects the justices to resolve the case by spring.