NCUA Asks Court to Dismiss ICBA's Suit over MBL Rule

The National Credit Union Administration today filed a motion in the U.S. District Court for the Eastern District of Virginia requesting that the court dismiss a suit filed by the Independent Community Bankers of America over the regulator's member business lending rule.

Along with the motion to dismiss, NCUA filed a 31-page memorandum defending the MBL rule, citing the original Federal Credit Union Act of 1934, as well as rulemaking from the late nineties, 2003 and the current rule, finalized earlier this year. NCUA alleges that ICBA has not suffered any injury as a result of the rule, noting that the rule has not yet even gone into effect. NCUA's memo further points out that ICBA's suit is essentially a challenge to the 2003 rule and is therefore time-barred from litigation. The agency claims that ICBA "has failed to state a claim upon which relief can be granted," and that the challenge "is based on a disagreement with NCUA's interpretation" of the rule.

NCUA offered no comment beyond the court documents.

The Credit Union National Association and the National Association of Federal Credit Unions – which have formed a rare partnership in support of NCUA in this matter – filed a joint statement reaffirming their support for the regulator in the matter.

"As our two organizations have stated, the NCUA acted well within its authority when it issued its member business lending rule. Submitting a motion to dismiss this baseless attack is the logical next step for the agency in defending that right. For our part, the CUNA/league system and NAFCU will continue to work collaboratively to defend the NCUA's authority to interpret the Federal Credit Union Act. Ensuring small businesses have access to much-needed capital remains a top priority for the credit union industry," said Dan Berger, president/CEO of NAFCU, and Jim Nussle, president/CEO of CUNA.

The motion to dismiss comes just days after NCUA approved an expansion of its field of membership rule, which broadens membership options for federal credit unions. ICBA had previously indicated that it intended to sue over that rule, as well, though it remains to be seen whether the banking trade group will file a separate suit or amend the existing suit.