When the Supreme Court opens its fall term on the traditional first Monday in October, the first case it hears will involve whether more than 2,000 actors will lose membership in the Actors Federal Credit Union (AFCU). The court's decision could also result in higher interest rates for AFCU members.
On Oct. 6, the high court is scheduled to here arguments regarding a 1990 lawsuit filed by the Amerian Bankers Association (ABA) against the credit unions' federal regulatory agency, the National Credit Union Administration (NCUA).
The crux of the lawsuit is based on bankers arguing that credit unions should only be allowed to serve a single employer group. Most of AFCU's members are associated with Actors' Equity Association, which would be considered its single employer group.
While the suit affects every credit union, a ruling in favor of the bankers could be especially detrimental to the AFCU. The credit union could lose actors associated with SAG, AFTRA, and a number of theatres. The AFCU could also lose more than 20% of its assets.
The actors credit union has 13,500 members through 40 affiliated unions, theatres, and arts organizations. They include Actors' Equity (9,930), the American Federation of Radio and Television Artists (1,124), and Screen Actors Guild (959). Theatre members include such legit stages as Lincoln Center, the New York Shakespeare Festival, and Roundabout Theatre Company. By narrowing AFCU's focus to only a core group, the credit union would be restricted to accepting funds only from members of Actors' Equity.
AFCU currently has assets totaling $36.6 million. A pro-banker ruling by the Supreme Court could cost the credit union $8 million in losses. "That would be 22% of our assets and have a devastating effect on us," Jeff Rodman, president of AFCU, has told Back Stage.
Seeking Legislative Relief
Refusing to simply leave credit unions' fate in the hands of the high court, the National Association of Federal Credit Unions in Washington, D.C., has spearheaded a drive for legislative relief. The association is strongly behind H.R. 1151, a Congressional bill which would amend the Federal Credit Union Act, and hopefully clarify language regarding membership in credit unions.
AFCU's Rodman said that the banks' lawsuit is based on a line in the act which reads, "Federal credit union memberhip shall be limited to groups having a common bond." The banks have asked the courts to interpret "common bond" to mean only one core group allowed per union. The proposed legislation would strike that line and add language broadening membership beyond a core group.
At press time, the legislation had garnered 115 sponsors in the House of Representatives, but the bill remained in the House Banking Committee. Rodman has attributed the lack of action to strong pro-banking forces among that committee's leadership. He has predicted the legislation as having a slim chance of passing th