Missouri Credit Union Commission rules for CUs, against bankers

JEFFERSON CITY, Mo. – The Missouri Credit Union Commission’s unanimous decision May 24 upholding an earlier field-of-membership expansion decision by the director of the state’s Division of Credit Unions for Springfield Telephone Employees CU came as no surprise to the credit union nor the Missouri Credit Union System. After all, the seven members of the commission were the same group that put together the policies and procedures on field-of-membership expansion, according to the credit union statute and were thoroughly familiar with what is and isn’t allowed. Still, when the commission handed down its ruling-the first since it was formed in 1999-and thereby denied an appeal by the Missouri Bankers Association and Century Bank of the Ozarks of the director’s decision, STECU’s President/CEO Don Ackerman remarked that, “We are obviously pleased with the decision of the Missouri Credit Union Commission. It was the right decision.” He added that, “The credit union was prepared to live with the commission’s decision, and we hope the bankers are too.” In addition to denying the bankers’ appeal, the commission also assessed the costs for the hearing to the MBA and Century Bank. The costs were undisclosed. The commission’s action on May 24 was the latest chapter in the first of three field-of-membership expansion appeals that have been filed by the Missouri Bankers Association and local banks challenging approvals by Director John Smith of the Missouri Division of Credit Unions. In the case concerning Springfield Telephone Employees CU, the MBA and Century Bank of the Ozarks appealed Smith’s decision allowing the $35-million credit union to include the 750,000 residents in the 417-telephone area code in their field-of-membership. STECU filed its FOM expansion application with the division on July 25, 2000. On Aug. 3, 2000, the Credit Union Commission exempted the 417 area code from the 3,000 group limitation on forming a new credit union. After the director approved the commission’s decision in October and published it in the Nov. 15, 2000 Missouri Register, the bankers appealed his decision on Nov. 30. On March 29, the commission heard arguments on the appeal on issues regarding applicability of law, competition and whether or not the bank and the MBA have standing to bring FOM expansion appeals before the credit union commission. The bankers claimed that Smith’s decision to grant STECU’s FOM expansion request was “arbitrary and capricious” and not based on evidence in his hands at the time he made his decision. Missouri law allows for area codes to be used to define a geographic expansion. After nearly five hours of hearing from both sides, the commission sent the attorneys representing the bankers and MCUS back to their offices with homework assignments to file briefs defending their position over whether the banks have standing to challenge the director’s decision. The bankers argued their right to standing based on identifying themselves as taxpayers and their claim that taxpayers’ money funds the Credit Union Commission and the Division of Credit Unions. The attorneys had five days to submit their briefs, then each had 10 days to respond to each other’s briefs. In an earlier interview, MCUA President/CEO Rosie Holub charged that the bankers did not have a “full understanding of how our funding is done.” She explained that state law states that all expenses of the state regulator, the Missouri Division of Credit Unions, are paid by credit unions by fee assessments to them. Checks for payment of these fees are sent directly to the state regulator and deposited in the Division of Credit Unions Fund. The Credit Union Division is totally fee supported by assessments to credit unions. “The bankers claimed that the state regulator’s decision to approve the expansion was `arbitrary and capricious’ and `not based on evidence in his possession at the time of the decision.’ The commission ruled in support of the regulator in both instances. We are certainly pleased with the outcome of the hearing,” said Holub. Peggy Nalls, senior vice president of governmental and regulatory affairs for the MCUS said, “The bankers’ arguments were consistent with their position, which is in opposition to the position of the director of the credit union division.” According to the Missouri Credit Union Statute, four of the seven members appointed by the governor to the Credit Union Commission must be individuals with credit union experience. Nalls defended their objectivity and said she didn’t think that clouded their ability to be impartial in the hearing. “These members, regardless if they’re active credit union professionals or former ones, are still bound to uphold the statute. There is no favoritism.” Nalls said she hoped the commission’s decision sends a message to the MBA about the FOM expansion appeals the bankers are filing, but she realizes that “each case is individual,” she said. At the May 24 meeting, the commission also received into evidence information regarding appeals by the MBA and two local banks of Director Smith’s decisions approving field-of-membership expansions for Central Communications Credit Union In Kansas City and South Community CU in St. Louis and Sullivan, Mo. Meanwhile, the bankers have 30 days from the time the commission’s written decision concerning Springfield Telephone Employees CU is issued to appeal the ruling to the Circuit Court of Cole County. Holub said she expects the bankers will appeal the commission’s decision to the courts. -