Saying that the NCUA’s new Field of Membership rules are “arbitrary, capricious, an abuse of discretion” the American Bankers Association has asked a federal judge to nullify the regulations.
In asking U.S. District Judge Ketanji Brown Jackson to approve its request for a Summary Judgment, the bankers said the NCUA has eroded the statutory restrictions that allow credit unions to operate.
The rules essentially allow credit unions to gerrymander their fields of membership to ensure that they can serve more affluent areas, the bankers said.
In October, the NCUA board approved the rules, which board members said would provide credit unions with more flexibility to determine their fields of membership. Then-board Chairman Rick Metsger said the rules would make it easier for people to gain access to affordable financial services.
However, the ABA contends that the rules went too far. Congress, the association argues, restricted community credit union membership to well-defined local areas.
The ABA cited previous court rulings against the NCUA and said that the new rules expands the field of membership for community credit unions “far beyond the limits imposed by Congress.”
In addition, the NCUA “has staked out a position that is considerably more extreme than the one rejected by a federal court, without acknowledging or answering the court’s objections,” the bankers contend.
Credit Union trade groups reaffirmed their support of the new NCUA rules
“This suit is a meritless attack that ignores the law and the agency’s authority to regulate credit unions,” said CUNA President/CEO Jim Nussle.
“This suit is another outrageous effort by the banking trade group to distort the truth in its effort to block consumers’ ability to choose a financial institution that puts them first,” said NAFCU President/CEO B. Dan Berger.
