Attorneys for the banking industry argued in federal court Friday that the National Credit Union Administration overstepped its authority in letting Members 1st Federal Credit Union in Mechanicsburg, Pa., extend its membership field to cover the more than 1.1 million residents of a six-county area.
The courtroom showdown focused on the term "local," which was added in 1999 to the NCUA's rules defining boundaries for community charters.
David Overstreet, a Washington attorney representing the American Bankers Association, told the court that in awarding the community charter, the regulator illegally combined two separate areas connected by Pennsylvania's Interstate 83 and approved them as a single, well-defined, local community. "NCUA's acceptance of two areas as one is arbitrary and capricious."
But Eric Womack, a Justice Department attorney representing the regulator, told the court that the NCUA conducted a comprehensive review of the proposed community, even requiring the $1.2 billion-asset credit union to reduce the originally proposed area.
The ABA, the Pennsylvania Bankers Association, and the Pennsylvania Association of Community Bankers have asked the U.S. District Court for the Middle District of Pennsylvania in Harrisburg to set aside the charter.
