The American Bankers Association has filed a lawsuit against the National Credit Union Administration saying the regulator's new field of membership (FOM) rules go too far.
ABA filed the suit in the United States District Court for the District of Columbia, alleging the 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."
Calling the rule part of a continuing effort by the regulator to expand the size and scope of credit unions, ABA suggested the new rule goes "well beyond congressional limits."
"NCUA's rule ignores statutory requirements at the expense of taxpayers, small banks and the communities those banks serve," said ABA President and CEO Rob Nichols in a statement. "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."
Nichols suggested the impact of NCUA's action affects not only banks, but also all taxpayers.
"The final rule risks further increasing the industry's tax exemption, which is already worth more than $27 billion over the next ten years," Nichols said. "Congress set appropriate limits on credit union activities in return for a tax-exempt status that no other trillion-dollar industry enjoys."
NCUA is now facing two different legal challenges from banks. The first was a suit filed by the Independent Community Bankers Association (ICBA) over the agency's reform of its member business lending rules.
