ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, December 5, 1996 TAG: 9612050025
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Bloomberg Business News
A federal judge Wednesday struck down new federal rules designed to make it easier for credit unions to expand their membership.
The ruling dashed credit union hopes that the rules would lessen the impact of a previous court order that all members of a credit union must share a single common bond, such as employment by the same company.
U.S. District Judge Thomas Jackson said the National Credit Union Administration violated his earlier order when it said in November that credit unions could accept members who share a common occupation or trade, even if hey don't work for the same company. He accused the regulatory agency of acting in a ``surreptitious, underhanded and collusive way'' by working secretly with credit union officials to develop the new rules.
Jackson also denied a request by the NCUA to delay the effective date of the earlier order, which he issued in October.
The rulings are the latest in a series of legal victories for banks in their struggle to limit the size of credit unions.
Both sides say the stakes in the battle are high. Credit unions are seeking to attract new borrowers, a move that could take potential customers from banks. Banks say that unchecked expansion would give credit unions the legal advantages now possessed by banks - without requiring credit unions to give up their tax-exempt status and their exemption from federal community investment requirements.
Federal law requires that members of the same credit union have a common bond, such as employment with the same company or membership in a community organization such as a church.
In 1982, the NCUA for the first time said it would allow employees from small companies to join an existing credit union, even if the new group doesn't share a common bond with the existing members.
LENGTH: Short : 43 linesby CNB