Banks, credit unions still bickering

A legal battle regarding the ability of credit unions to expand is over, but that's not keeping banks and credit unions from bickering about their roles in the financial world.

The American Bankers Association, the Utah Bankers Association and five Utah banks have dropped their lawsuit that challenged the National Credit Union Administration's approval of credit union expansion.

The reason? The NCUA earlier this year rescinded its approval of an America First Federal Credit Union expansion application — and America First agreed to discontinue its pursuit of new members in areas designated as underserved. At that time, the NCUA also issued a moratorium on further expansions into underserved areas, and it voted in June to alter the regulation on which its original decision was based.

The suit was filed in November. The ABA, UBA and Utah banks argued that the NCUA had violated the Federal Credit Union Act when it allowed Ogden-based America First to expand to certain parts of Utah. The NCUA said at the time that a provision of a law allowed some credit unions to add "underserved" areas to their membership fields.

But the NCUA, credit unions' regulator, eventually admitted the statute states that only multiple group credit unions are eligible to add underserved communities, and America First does not have a multiple-group charter.

"Ironically, the real winners as a result of the bankers' action are existing credit union members," said Howard M. Headlee, president of the Utah Bankers Association. "Perhaps now, these large, bank-like credit unions will use the millions in profits they have been withholding from their members in order to fund this illegal expansion and use it to serve the poor in the communities they are supposed to have been serving in the first place."

John Lund, America First executive vice president, didn't see the lawsuit dismissal the same way.

"It's just unfortunate that the bankers feel it's necessary to continue to sacrifice and limit the availability of the credit unions to go in and serve these underserved, low-income areas," Lund said. "It's the consumer that's going to be hurt. America First is still very healthy and will continue to be healthy, but it's those consumers and underserved areas that are being hurt."

Lund also said it is "unfortunate" that the bankers sued, especially in light of reports that the banking industry is the most profitable industry in the country and that Utah banks are the most profitable ones in the country.