Judge Denies Banker Lawsuit Over MBL Posted by Association of Vermont Credit Unions on 11:23 AM

This week a federal judge dismissed the lawsuit filed by the Independent Community Bankers of America (ICBA) against NCUA over its 2016 member business lending rule (MBL). The ICBA claimed that revisions to the NCUA MBL rule weakened the statutory MBL cap and made it easier to exclude non-member loans from the cap calculation.
 
Judge James C. Cacheris said that the ICBA failed to demonstrate harm from the 2016 regulatory changes. In an unusual move, Cacheris ignored precedent that directs judges not to rule on the merits of the case if standing is not granted.  Instead, he found that NCUA's interpretation of "member business loan" was reasonable. The court also held that the challenge to the MBL rules was time-barred by the six-year statute of limitations because the underlying 2003 rule was not sufficiently "re-opened" in 2016 to allow the challenge. He went on to state that even if the ICBA had established standing and timeliness, the court still would have found the rules satisfied the requirements established by the Administrative Procedures Act and existing case law.

NCUA Chairman Metsger said that the court's dismissal of the banker suit affirms that NCUA acted within its authority in issuing the final MBL rule.  Board member McWatters said that the court's dismissal is a "victory for small businesses throughout the country."

The ICBA reiterated that it will continue to pursue efforts to level the tax and regulatory playing fields between community banks and credit unions through all avenues. The American Bankers Association (ABA) stated that it remains supportive of the ICBA legal effort and will closely monitor any appeals and developments in the case.

Another lawsuit by the ABA over NCUA's field of membership final rule is pending.