TUSCALOOSA, Ala. — Alabama One Credit Union has been taken into conservatorship by the state of Alabama after months of startling accusations against the institution.
Alabama Credit Union Administration (ACUA), the agency tasked with regulating the state’s credit unions, wrote in its order of conservatorship filed Thursday that the had exhibited “persistent patterns and practices” of allowing insiders to have loans on preferential terms and conditions, falsified loan information for insider auto loans and other items of value in exchange for making loans to other businesses.
Earlier this summer a former board member of Alabama One and CEO each filed suit against the state. Former CEO John Dee Carruth asserts the institution was put through unfair regulatory scrutiny. This week Governor Robert Bentley, a longtime resident of Tuscaloosa, was added to the defendants in the case.
According to Birmingham Business Journals, Alabama One has more than 60,000 members and around $598 million in assets, making it one of the state’s largest credit unions. The ACUA said the takeover will not affect credit union members or their accounts and the credit union will continue to operate as usual.
“Alabama One Credit Union members will have continued access to their funds through Alabama’s One’s branches, Internet banking and ATMs,” said ACUA in a statement.
Mr. Carruth says that the state’s actions “were the result of a politically connected plaintiff’s attorney, Jay Smyth, working with David Byrne, Bentley’s chief legal advisor.”
Carruth’s lawsuit alleges several state officials colluded to treat the institution harshly, ensuring it would be eventually placed under the conservatorship.
The ACUA counters, however, that the credit union broke a number of state and federal laws and regulations, made several bad loans and business deals, and failed to cooperate with investigations.
“I would hope that no one is going to do anything improper going forward, not under the state’s watch,” said ACUA attorney Robert Reynolds. “Now we’re going to get to the bottom of what has happened in the past and take action against those that created these problems.”
Like this article? Hate it? Follow me and let me know how you feel on Twitter!
— Elizabeth BeShears (@LizEBeesh) January 21, 2015
