Last July's Alabama Credit Union Administration's takeover of the $193 million Mutual Savings Credit Union of Birmingham, Ala. was improper and illegal based on faulty data used by the state's top regulator, an attorney representing ousted CEO Dale Dalbey said Friday.
"The conservatorship was totally unjustified based on the facts and let me say there would have been many more Alabama credit unions with far more severe problems that would have had to undergo the same fate if he had applied the same criteria," said Victor Hayslip, a partner in Burr & Forman, a Birmingham firm.
Hayslip was commenting on a state court suit brought last month by Dalbey and members of the Mutual Savings board seeking an injunction to block the July 31 conservatorship of Mutual, deemed by Administrator of Credit Unions T. Glenn Latham to have suffered inadequate capital following a series of sharp losses on its commercial loan portfolio.
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At the time of its seizure, Mutual "had a three star rating," said Hayslip apparently referring to the Bauer Financial ratings service.
"We have yet to get a single piece of correspondence" from Latham attorneys backgrounding or justifying financial data on the seizure move, said Hayslip. A Shelby County Circuit Court judge in Columbiana is slated to hear the first witnesses in the legal dispute Oct. 26.
Latham told Credit Union Times Friday he is "now the CEO and Board of Directors" of Mutual until a new CEO and board are put in place, a process that will not be completed until early in 2010. In the meantime, Mutual "has an excellent staff and they are doing well" in operating the CU.
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