NORTH LITTLE ROCK, Ark.—NCUA on Thursday liquidated People Trust Community FCU, closing a small Arkansas minority depository institution after a months-long dispute over whether the credit union’s problems reflected unsafe management or the kind of vendor and technology failures its founder said regulators failed to properly weigh.
NCUA said it liquidated the $1.45-million credit union after determining it was insolvent and in violation of numerous provisions of the Federal Credit Union Act and NCUA regulations, including operating in an unsafe and unsound manner.
People Trust Community FCU had 1,830 members and served Pulaski and Saline counties in Arkansas, according to NCUA. That represented a steep decline from January, when NCUA placed the credit union into conservatorship and said it had $3.27 million in assets and 1,796 members.
The liquidation follows NCUA’s Jan. 16 conservatorship order, when the agency said member services would continue while it worked to resolve operational issues and cited “unsafe and unsound practices.” At that time, NCUA arranged for People Trust members to conduct transactions through Arkansas Federal Credit Union’s Cantrell Road branch in Little Rock.
As CUToday.info reported, Arlo Washington, People Trust’s founder and former CEO, filed in federal court seeking to lift the conservatorship, arguing NCUA relied on an incomplete record, ignored vendor failures and acted amid alleged conflicts of interest. Washington’s filing alleged the credit union’s problems were driven by core system failures, ransomware disruption, reconciliation issues and reporting challenges rather than management misconduct.
The case escalated earlier this month when Washington sought an emergency order to stop liquidation. In an April 1 declaration, he said he had been informed NCUA intended to liquidate People Trust on April 3 and argued liquidation would permanently dissolve the credit union, disrupt services for roughly 1,800 members and effectively moot his claims.
U.S. District Judge Brian S. Miller denied Washington’s temporary restraining order request on April 3. The judge said he was sympathetic to Washington’s position but found Washington had not shown he personally would suffer irreparable harm if the credit union were liquidated, noting the credit union was a separate entity and that Washington could not seek emergency relief on behalf of other members.