Judge finds NCUA Violated HR-1151

Troubling Verdict Expected to Turn Back the Clock on Credit Union FOM Expansion - Mutual Savings Bank Charter to Offer Only Logical Alternative for Some Credit Unions

From CU Journal Online Edition

Judge Strikes Down NCUA's Community Grants In Utah

SALT LAKE CITY (12/10/04) -- A federal judge ruled Thursday that NCUA violated the Federal CU Act in 2003 by granting a broad six-county community field of membership for Tooele FCU, which at the time was the largest community charter ever granted a federal credit union. In a 21-page decision, the U.S. District Court for the District of Utah, ruled the six-county region, which encompasses more than 1.4 million people, two-thirds of the state's population, violated provisions of the FCU Act and NCUA's own FOM rules drafted to enact provisions of the law, requiring that community FOMs consist of "well-defined local community"; that geographic boundaries be clearly defined; and that the residents of such communities have common interests or interact. The ruling could have broad ramifications because NCUA has approved at least four other Utah credit unions for the same community FOM. The suit was filed by the Utah Bankers Association and the American Bankers Association. NCUA officials were not available to comment on the ruling.