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What Lead To Our Charter Conversion
Back on Friday, October 25, 1996, the U.S. District Court
for the District of Columbia issued an injunction against
the National Credit Union Administration (NCUA) and other
defendants in two consolidated cases.
In the first case, First National Bank and Trust Co., et
al., versus NCUA, et al., the Court of Appeals for the D.C.
Circuit ruled, in connection with select employee group
expansions limited only to AT & T Family Federal Credit
Union, that all members of an occupational federal credit
union must share a single common bond. The Court of Appeals
then returned that case to the trial court for
implementation of its ruling.
The second case, American Bankers Association versus NCUA,
et al., was brought after the First National Bank challenged
NCUA’s multiple group policy as applied nationwide and
sought immediate injunction relief to prevent NCUA from
allowing additions to federal credit unions pursuant to that
policy. The trial court combined the two cases and granted
an injunction against NCUA. NCUA believed that the
injunction was incorrectly decided. What did this mean for
Federal Credit Unions? The injunction imposed on October 25,
1996 prohibited credit unions from enrolling new members
outside the core group. In our case, the core group was Dana
Corporation. Although Dana Reading Federal Credit Union
serviced about 30 affiliate groups, we were not permitted to
sign up any new members from those affiliates.
Why did this happen?
Some bankers do not understand the basic fundamentals that
separate “not-for-profit” credit unions from for-profit
financial institutions.
Banks claim credit unions were no longer acting like
financial cooperatives, but rather were operating more like
for-profit financial institutions. So bankers believed the
same operating rules should apply to both credit unions and
banks to create a “level playing field”. However, the number
of financial services and size of membership at a credit
union didn’t change its mission. Credit Unions have always
differed from other financial service providers in that
they:
- Operate as
not-for-profit organizations;
- Are owned by members,
each with an equal vote regardless of account balance;
- Are governed
democratically by members who serve as directors, not by
outside stockholders;
- Serve only people
within their field of membership, not the general
public;
- Serve all members
equally.
Back on December 24, 1996,
federal credit unions did receive a slight reprieve. Federal
Credit Unions were once again allowed to enroll members from
the affiliates already defined in the field of membership.
This meant that we could once again begin signing up new
members from other select employee groups already in our
field of membership. However, we were still prohibited from
adding any new groups.
What was next?
The U.S. Supreme Court met back on Friday, January 17, 1997,
to review cases it might hear. It had not yet been announced
whether it would hear the landmark AT & T Family Federal
Credit Union case. In short, it was in the “pending file”.
The Supreme Court’s next scheduled conference to consider
whether or not to hear pending cases was Friday, February
14, 1997. However, it was still possible, at this point,
that the Supreme Court could delay an announcement until
later that February.
Legislation to amend the Federal Credit Union Act was our
other solution to this Field of Membership problem.
What did we do?
We got involved!!! We urged our members to write to our
Congressmen and Senators. Our job was to make them
understand that this injunction was limiting consumers the
right to choose where they could save and borrow. More than
70 million Americans had chosen to pay lower fees and earn
better rates at not-for-profit credit unions. Congress never
intended the 1934 Federal Credit Union Act to limit credit
union growth or to protect banks from competition. Our
legislators listened. A bill was introduced (H.R. 1151) that
would give more people access to credit unions. Congressman
Holden, a true friend to credit unions, signed onto the bill
giving us his full support.
Then came our victory! On August 7, 1998, at 10:30 a.m.,
President Clinton signed into law the Credit Union
Membership Access Act, completing a 20-month campaign by the
credit unions to ensure consumer choice in financial
institutions.
During this period, our growth became stagnate. By the same
token, recent controversies, restructuring and layoffs at
the Dana Corporation were beginning to have a negative
impact on the credit union. Fortunately, because the credit
union had built a strong capital foundation, we were able to
weather the adverse conditions and remain a fiscally sound,
viable financial institution. At this point, the credit
union leadership was less optimistic about future progress
at the Dana Corporation and the potential for any
significant contribution to the credit union’s continued
success.
Consequently, the Board of Directors and Management
carefully considered alternatives for ensuring the future of
the credit union as the primary source for fulfilling our
members financial needs. A decision was made to apply to the
National Credit Union Administration for conversion from a
multi-occupational group charter to a community field of
membership charter. Simply put, once approved we would be
able to do business with anyone living or working in Berks
County, PA, rather than being limited to the employees of
our current affiliate groups and their family members. This
was a difficult decision for the leadership of this credit
union, but one, which we believed, would present
opportunities for enhancing the values of the credit union
to our current members and others in the community who may
not have had credit union services available to them.
And, on July 13, 2000, the National Credit Union
Administration granted Dana Reading Federal Credit Union a
Community Charter. As you may well know, Dana Corporation
closed on September 22, 2000. We were truly blessed with the
timing of the approval.
The Charter Conversion reads that we may now serve anyone
who lives, works, worships, attends school, or owns a
business or other legal entity in Berks County. This field
of membership includes immediate family members and
households. “Immediate family member” is defined as a
spouse, child, sibling, parent, grandparent, or grandchild.
This includes stepparents, stepchildren, stepsiblings, and
adoptive relationships. “Household” is defined to include
persons living in the same residence and who maintain a
single economic unit. This includes any person who is a
permanent member of, and helps maintain, the household.
To better reflect our newly granted charter, we have changed
our name to Berks Community Federal Credit Union.
On behalf of the Board of Directors, Committees, Management
and Staff, we invite you and your friends, family,
co-workers and neighbors to JOIN US!!!
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