RULING CURBS COMBINING OF CREDIT UNIONS : FEDERALLY CHARTERED GROUPS MUST SHARE BOND, JUDGE SAYS.Byline: Deborah Adamson Daily News Staff Writer Excited about your new job? It's too bad you might not be eligible for the company credit union. This week, several federally chartered credit unions quietly began turning away new customers after a federal judge in Washington, D.C., issued an injunction against multicompany institutions. The ruling prohibits federal credit unions that represent many firms from accepting prospective members who don't belong to the original group. ``We're disappointed,'' said Tammy Tagami-Reeves, vice president of marketing at Lockheed Federal Credit Union in Burbank, one of the state's largest credit unions with 500 employee groups and 110,000 members. ``We really believe the effects of this court decision hurts consumer choice.'' Added Annette Romm, vice president of marketing for Premier America Federal Credit Union in Chatsworth: ``We will try to get this reversed.'' The court order affects about 3,500 of the nation's 7,300 federally chartered credit unions - and about 35 million people. It does not affect the more than 4,000 state credit unions. California has about 540 federal credit unions, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the California Credit Union League A credit union league (League) is a United States state-level trade association for credit unions, which are non-profit financial cooperatives. Credit union leagues hold a primary interest in the Credit Union National Association (CUNA). in Pomona. The injunction by U.S. District Court Judge Thomas Jackson on Oct. 25 came after an appellate court A court having jurisdiction to review decisions of a trial-level or other lower court. An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed. decided that AT&T Family Credit Union - representing 112,000 members and 150 employers - did not conform with the 1934 Federal Credit Union Act's description of a common bond among credit union members. Historically, credit unions were formed by workers sharing a common bond - such as employees of one company. But in 1982, the National Credit Union Administration The National Credit Union Administration (NCUA) is responsible for chartering, insuring, supervising, and examining federal credit unions (FCUs) and for administering the National Credit Union Share Insurance Fund. said that almost any company with fewer than 500 workers could join other credit unions. Lockheed started accepting outside employees after the defense industry downturn. The injunction was sought by the American Bankers Association The American Bankers Association (ABA) is comprised of banks and other financial institutions. It seeks to promote the strength and profitability of the banking industry by Lobbying federal and state governments, building industry consensus on key issues, and providing products and and several other industry groups seeking to rein in to check the speed of, or cause to stop, by drawing the reins. to cause (a person) to slow down or cease some activity; - to rein in is used commonly of superiors in a chain of command, ordering a subordinate to moderate or cease some activity deemed excessive. See also: Rein Rein ``a few credit unions who have clearly outgrown their charter,'' said Virginia McGuire, ABA Aba (ä`bä), city (1991 est. pop. 264,000), SE Nigeria. It is an important regional market, a road and rail hub, and a manufacturing center for cement, textiles, pharmaceuticals, processed palm oil, shoes, plastics, soap, and beer. spokeswoman. Another court hearing is scheduled for December. At that time, divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). orders could be issued in the AT&T case. ``I really hope (the banks) would drop this,'' said Grace Mayo, chief executive of Telesis Federal Credit Union in Chatsworth, which has 20,000 members and over 200 groups. ``We have a very different structure. We're not a bottom-line institution.'' Credit unions - unlike banks - are nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. , exempt from income tax and generally offer lower interest rates on loans and higher rates on savings. The 11,500 credit unions nationwide have assets of about $310 billion. Instead of complaining, banks should ``stop paying their board of directors, cut salaries and stop making a profit in every transaction,'' said John Annaloro, senior vice president of public and government relations at the California Credit League. |
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