JUDGE DASHES HOPES OF CREDIT UNIONS.Byline: Rob Wells Associated Press The legal brawl over who can join credit unions Credit Union Member-owned financial co-operative. These institutions are created and operated by its members and profits are shared amongst the owners.Notes: As soon as you deposit funds into a credit union account, you become a partial owner and participate in the union's profitability. Credit unions are formed by large corporations and organizations for their employees and members. grew more heated Wednesday, with a federal judge suggesting he might be dealing with a ``rogue federal agency'' and ordering it to rescind 31 recent credit union expansions. U.S. District Judge Thomas Penfield Jackson accused the National Credit Union Administration of acting in collusion with industry groups to adopt rules that evade his order restricting credit union membership. Jackson said he was considering referring the case to the U.S. attorney to see if federal laws had been broken. ``I think the allegations are extremely serious,'' Jackson said during a hearing in U.S. District Court. Attorneys for the federal agency defended the regulators' conduct and new membership rules and said they were following the guidance of a previous appeals court ruling. Jackson denied requests by the credit union agency, the Justice Department and two credit union trade groups to suspend all or part of his Oct. 31 order preventing credit unions from signing up members who aren't part of their ``core'' charters - such as employees at a single company or members of a trade group. But Jackson didn't take the step most feared by credit unions: ordering an estimated 10.5 million people who joined credit unions under expanded membership rules in recent years to leave their credit unions and seek banking services elsewhere. Jackson's ire was focused on agency rules that expanded the definition of who can join a credit union based on a person's occupation or community. Jackson closely questioned credit union lawyers about their conversations with regulators prior to the rule's approval, which occurred without prior public comment because of what the agency described as ``emergency'' conditions. The judge said the rule ``was adopted collusively with the specific intent to circumvent the terms of the injunction.'' ``I don't know if you represent a rogue federal agency here,'' Jackson said to one agency lawyer. The agency said it took emergency action because it believed credit unions' safety and soundness could be harmed by the court order, since millions of consumers potentially would be denied credit union membership, affecting the industry's viability. |
|
||||||||||||||

Printer friendly
Cite/link
Email
Feedback
Reader Opinion