NCUA mulls options in conversion suit

From CUNA News Now

SHERMAN, Texas (8/26/05)--The National Credit Union Administration (NCUA) is reviewing its legal response to a U.S. District Court magistrate judge's written recommendations to support his finding against NCUA in a lawsuit filed by a Texas credit union seeking to convert to a mutual savings bank.

The federal agency can either accept U.S. District Court Magistrate Don Bush's recommendation or file an objection to it.

NCUA has until Sept. 8 to file written objections before U.S. District Judge Richard Schell makes a final ruling based on Bush's recommendations or decides to hold another hearing on the matter.

Bush's 17-page report, released Wednesday, provided written support for his Aug. 17 ruling that the Plano, Texas-based Community CU complied with NCUA's regulations in its disclosures to members about the proposed conversion to a mutual savings bank.

Bush also said the regulator's refusal to certify the credit union members' vote to convert was "arbitrary and capricious" (News Now Aug. 18).

In his written report, Bush criticized NCUA's assertion that Community CU failed to provide members with required disclosure materials. "Nothing could be further from the truth," wrote Bush.

Bush also wrote, "The NCUA should not be allowed to disapprove a vote due to a situation caused by its own ineptness, which, when reviewed from the entire record, is much ado about absolutely nothing."