NCUA's Vantage Conversion Denial May Head to Court
9/20/2010 By: Jim Rubenstein; CU Times
The NCUA's contentious denial last week of a federal conversion charter sought by the $654 million Vantage Credit Union of Bridgeton, Mo., could soon head to a federal court, it was disclosed Monday.
The possibility of litigation on the two-year-old community charter case by Vantage regarding its attempt to broaden its bi-state field of membership was raised by Hubert Hoosman, its president/CEO, who charged that the NCUA board made serious and "very troubling errors with broad injury to multiple community charters everywhere."
The federal multiple community charter, he concluded, "is basically dead" based on the NCUA's 2-1 board decision Sept. 16 upholding the Region IV director’s denial of the application. According to the NCUA, Vantage as part of its conversion application had requested to include the city of St. Louis and seven additional counties, four in Missouri and three in Illinois.
The Vantage decision has drawn wide industry interest for its impact on interstate FOM expansion and, as one Washington lawyer put it, "Vantage unfortunately got caught between two recent rulings on community charters."
"Look, this case is so sensitive we can't even discuss it," quipped one East Coast consultant who tracks NCUA regulation and compliance.
In his e-mailed statement, Hoosman expressed deep disappointment at the ruling. "The future of federal chartered FOM memberships consisting of multiple communities is dead and credit unions just haven't realized it yet," he said. "Unless you are applying for a single county, single municipality or an extremely well defined rural district, you're dead from multiple community federal charter perspective."
"This is a great way to keep our banker friends happy," he added.
Due to the conservative interpretation of the new community charter rules, he went on, "the future of community charters involving multiple communities are almost totally in the hands of state regulators."
"I'm sure there will be exceptions for federal charters," he said. "My greatest fear is after the economy rebounds, progressive credit unions will get frustrated with the new standards, and seriously consider alternative charters as a means of developing a healthy growth strategy to better serve members."