"America First Credit Union thought they could solve all their problems by running to the federal charter. But now the same issues are catching up with them. It's time for them to stop playing these legal games and decide what they want to be. For example, in just the past six months, two of the largest credit unions in Texas and the largest credit union in Michigan voluntarily converted to become cooperatively owned, mutual savings banks. They handed in their tax exemption for unlimited membership and banking powers."

Scott Simpson, president of the Utah League of Credit Unions, said Tuesday he was "a little bit" surprised by the NCUA's actions, "but I can understand the need for prudence."

"The interesting thing with this case specifically is the duplicitous nature with which the banks approach us," Simpson said. "They criticize credit unions for not reaching out to underserved communities, and then they sue credit unions that reach out to underserved communities. I just hope our elected officials take note of that.

"It's some cross-talk. They are trying to contain credit unions to make them take steps backwards to the detriment of the citizens of this country, and that's unfortunate. I don't know how else to describe the frustration."

In a prepared statement, Edward L. Yingling, president and chief executive officer of the American Bankers Association, said the NCUA "essentially admitted its rule allowing community-based credit unions to extend their common bond by adding so-called underserved areas is fundamentally flawed."

The law, he said, is clear and does not allow the NCUA to combine "community and so-called underserved bonds."

"This moratorium is simply postponing the inevitable. NCUA has been an enabler, allowing large community-based credit unions to skirt congressionally mandated membership restrictions under the guise of reaching out to 'underserved' areas," he said.

In his statement, Yingling expressed skepticism about the NCUA's review of its rule about underserved expansions.

"NCUA's history suggests the agency may be looking for other ways to justify expansions like America First's," he said. "The fact is, NCUA lacks the authority to approve the broad expansions that are at the heart of this case, and no amount of internal review or rulemaking by the NCUA will fix that."

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E-mail: bwallace@desnews.com