The Independent Community Bankers of America (ICBA) has decided not to appeal a federal judge’s decision to toss an ICBA suit challenging the NCUA’s Member Business Lending rules.
“Instead, ICBA will explore all avenues for redress of NCUA’s unjustified and outrageous expansion of limitations on credit union commercial lending activities under current congressional statutes,” ICBA President/CEO Camden Fine said.
Fine went on to say that the NCUA is a “captive regulator” of credit unions and that the ICBA will take the issue to Capitol Hill.
In adopting the new rules, the NCUA had said was moving away from prescriptive limits on credit unions such as collateral and security requirements, equity requirements and loan limits and to a principles-based regulation.
However, the ICBA contended that the new rules violated federal law governing credit unions and provided unfair competition to banks because credit unions are tax exempt.
In January, Judge James C. Cacheris of the Eastern District of Virginia said the lawsuit had no substantive merit, adding that he also was dismissing the case on procedural grounds.
Fine said the case illustrates the difficulty in challenging rules under the so-called Chevron doctrine in which the U.S. Supreme Court said that in most cases, courts must defer to federal agencies’ interpretations of statutes.
“ICBA will continue to call on Congress to prevent credit unions and their captive regulator from continuing to unreasonably expand their activities beyond any limits justified by their tax exemption, especially at the expense of taxpaying community banks,” Fine said.
The ICBA suit is not the only legal challenge to NCUA rules.
The American Bankers Association has filed suit against the agency challenging its new Field of Membership rules. In that suit, the ABA contends that the NCUA’s expansion of FOM rules violates federal law.
