Bankers Sue NCUA Posted by AVCU on 11:37 AM

As reported in Credit Union Journal today, the Independent Community Bankers of America filed suit against the National Credit Union Administration, claiming the agency's recent overhaul of its member business lending rules violate two different laws.

In 1998, Congress limited the size of credit unions' member business lending portfolios to 12.25% of total assets as part of the Credit Union Membership Access Act, which resulted from another banker lawsuit to restrict membership in credit unions. With this new lawsuit the ICBA argues that rules approved by the NCUA Board in February allow credit unions to exceed the cap by not counting certain purchase-loan participations against it. ICBA says the rules are "contrary to the plain language" of both the Federal Credit Union Act and the Credit Union Membership Access Act.

In a website statement, ICBA president and CEO Camden Fine says that the . . .

"unlawful rule from the NCUA is the latest example of the agency stretching the law beyond its breaking point to serve as the tax-exempt credit union industry's regulatory rubber stamp." 

The ICBA statement goes on to say that . . .

"the NCUA rule puts consumers, taxpayers and the financial system at risk by jeopardizing the safety and soundness of federally insured credit unions. It also expands the federally funded competitive advantages these tax-exempt institutions enjoy over community banks. As credit union assets have ballooned, the NCUA’s role has transformed from a federal financial regulator to an industry cheerleader."

The lawsuit, Independent Community Bankers of America v. National Credit Union Administration, was filed in the U.S. District Court of the Eastern District of Virginia.  ICBA said it is considering filing a second lawsuit to challenge changes NCUA made recently to the field of membership regulations.