Supreme Court Hears Credit Union Case

Dispute could affect millions of Americans; court also lets stand a lower-court immigration decision

By Charles Bierbauer/CNN

WASHINGTON (Oct. 6) -- In a case that could affect the way millions of Americans handle their personal finances, the Supreme Court heard arguments today in a dispute between a bank and credit union.

The case -- AT&T Family Federal Credit Union v. First National Bank and Trust Co. -- could force some people out of credit unions.

When Rene Siegfried separated from her husband she wanted to buy out his share of their house. "No bank would touch me because my credit was bad," Siegfried says. "And I went to the credit union, needing to pay him off. And they helped me. They were there for me ... "

Siegfried works for an Asheboro, N.C., furniture manufacturer, but belongs to the AT&T Family Federal Credit Union. It's a big family, with more than 100,000 members who not only work for AT&T but also Black and Decker, Energizer and Klaussner Furniture.

Local banks filed the lawsuit now before the Supreme Court, contending that credit unions are supposed to be made up of members with something in common.

"We are not out to destroy credit unions," said Michael Miller of First National Bank. "We're out to get them to follow the law as it is written and we have no argument with people who operate with single common bond credit unions ... "

The Supreme Court must judge whether the banks have a legitimate gripe and whether credit unions must shrink.

"If the court rules against us, we run the risk of possibly 16 million Americans being divested of their credit union membership," said Marcus Schaefer of the AT&T credit union.

It's hard to tell the AT&T credit union in Winston-Salem from Asheboro's first national bank. Each offers checking and savings accounts, IRAs and CDs, mortgages and auto loans.

Banks complain credit unions can offer better rates because they are non-profit and tax-exempt. That is not an issue before the court.

Credit unions also want Congress to act. Their latest ad campaign seeks legislation to allow broader membership, even if the court does not.

The Supreme Court could find that Klaussner Furniture has no "common bond" with AT&T's credit union. That would make the local banks happy, but it could leave the furniture manufacturer with a couple thousand employees without the credit union they think is an important benefit, even a necessity.

In Other cases:

On the first day of its 1997-98 term, the Supreme Court also:

• Failed to come to the assistance of state officials in California and Arizona who sought federal reimbursement for the costs of providing services to illegal immigrants. Without comment, the high court let stand lower court rulings that said the state-federal dispute was political, not legal.
• Declined to order the public release of President Bill Clinton's videotaped Whitewater testimony from the 1996 trial of ex-Clinton business partners James and Susan McDougal and former Arkansas Gov. Jim Guy Tucker.
• Rejected a lawsuit challenging the federal ban on owning machine guns.
• Refused to hear a challenge to the Clinton Administration's "don't ask, don't tell" policy on homosexuals serving in the military.

In Other News:

Monday Oct. 6, 1997

• Clinton: Delayed Release Of Tapes Was Accidental
• The Coffee Tapes
• Ickes Could Be A Tough Witness
• Clinton Uses Line-Item Veto On Military Projects
• Clinton Says Climate Change Risk Is Real
• Supreme Court Hears Credit Union Case