SHERMAN, Texas – Even though, as of press time, it appears that the Court deciding the case between the $1.4 billion Community Credit Union and the NCUA ignored the "friend of the court" briefs, the small group of Community members who have gone on record as opposing the credit union's move to a bank charter nonetheless tried to weigh in with their opinions. The Texas Coalition For Credit Union Members filed a 32-page argument before the Court, urging the judges who would decide the case to reject their credit union's attempt to, in their view, become a bank while leaving most of its members "disenfranchised." "CCU's alleged 15% `majority' was obtained only by virtue of the improper disclosures that lie at the heart of NCUA's decision," the members argued. However, when the membership of CCU was given the federally-mandated disclosures in a clear and unambiguous manner, the majority of members who voted opposed conversion." Much of the members' arguments resembled those the agency had already offered in its own defense, but the members' group presented a couple of new ones. They noted, for example, that CCU had charged NCUA with putting inaccurate statements into its "boxed disclosures" when the credit union, they alleged, had put just as misleading statements in its "rebuttal" to those boxed statements. "As an example, federal regulations require that member-owners be informed that, `[i]n a credit union, every member has an equal vote… In a mutual savings bank, account holders with larger balances have more votes and, thus greater control.' This statement is true," the group contended. "However, in CCU's mailings to its member-owners it claimed that: `We do not believe that this change will give any member or group of members substantially greater control than credit union members currently enjoy,' This assertion is objectively false," the group added. The credit union members also argued that Community's board of directors had been dishonest in the disclosures since they had not affirmatively disclosed their intention to receive stock in the institution after the stock conversion. "Only with such a disclosure could members adequately assess the motivating forces behind the directors' recommended conversion plan," the group wrote. "Only with such a disclosure could members detect the potential for bias on the part of their board. CCU's failure to include this disclosure is deceptive and in violation of applicable federal regulations. This alone would have been a sufficient basis for NCU to reject CCU's proposed conversion." For its part, the credit union argued in a brief that the court should ignore its members' pleadings because, ironically, it admitted that the NCUA really had their best interests at heart. "TCCUM purports to protect the interests of certain CCU members who are at risk of being disenfranchised," the credit union argued. "However the National Credit Union Administration, one of the named defendants in this case, already adequately represents these interests," it added. Meanwhile, other groups last week also filed friend of the court briefs. The American Bankers Association joined America's Community Bankers and the Independent Community Bankers Association of America in a brief, repeating many of the opinions already offered by other banking groups. "The method and means of folding a single piece of paper cannot be the basis of a reasoned regulator's decision," the banking trade groups' brief stated. Furthermore, the brief argued, NCUA has attempted to steer the court's attention away from the core issue – the vote to convert from one mutual charter to another mutual charter – to the possibility that the new mutual might convert to a stock institution. Mutual-to-stock conversions are the jurisdiction of a different regulator, the Office of Thrift Supervision, the associations asserted. The story about the fight and court case between the NCUA and the credit union also made the front page of the business section of the Dallas Morning News on August 13. The carefully balanced article covered both the history of the controversy as well as what the fight may mean to the credit union industry and the issue of future credit unions also seeking to become banks. However, by coincidence the paper also ran a picture of Community CEO Gary Base wiping a smudge off the new Jaguar he purchased for his wife on its front page. The picture illustrated an article about the pressure for steadily rising consumption in Collin County, one of the counties in the Dallas area, and did not quote Base. -

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