Bankers Sue NCUA Again Posted by Association of Vermont Credit Unions on 2:04 PM

As reported by Credit Union Journal and Credit Union Times, the American Bankers Association today filed a lawsuit against the National Credit Union Administration saying the regulator's new field of membership (FOM) rules go too far.  The case was filed in the DC United States District Court.

In its filing, the ABA says that NCUA's field of membership rule "disregards Congress' explicit instruction that community credit unions serve only a single, well-defined local community. Instead, it declares that large regions including millions of residents and cutting across multiple states are single 'local' communities."  The ABA also says the rule is part of a continuing effort by NCUA to expand the size and scope of credit unions.

ABA President/CEO Rob Nichols said in a statement . . .

NCUA's rule ignores statutory requirements at the expense of taxpayers, small banks and the communities those banks serve.  ABA has successfully sued NCUA three times on past occasions in which the agency exceeded its congressional authority, and we look forward to challenging their latest violation of the law in federal court.  The final rule risks further increasing the industry's tax exemption, which is already worth more than $27 billion over the next ten years.  Congress set appropriate limits on credit union activities in return for a tax-exempt status that no other trillion-dollar industry enjoys.

Many provisions in NCUA's initial proposed rule made it into the final rule, except for including a congressional district as a well-defined local community.  NCUA received 11,380 comments, about 3/4 of which were favorable. NCUA has also proposed additional changes to its field of membership regulations, with comments due this Friday.

Recently, the Independent Community Bankers Association (ICBA) also filed suit againt NCUA over changes to its member business lending rule.