If the bankers hoped THAT BY SUING the National Credit Union Administration (NCUA) over the new member business lending rule (MBL) and telegraphing its preparations for suing over field of membership (FOM) might persuade the regulator to rethink its plans to overhaul FOM, this may well be one of the greatest examples of "be careful what you wish for" I've seen in a long time.
Because NCUA did, indeed, rethink its FOM rule. In fact, it did so much additional thinking that it approved the final rule and then immediately launched into a second go-round on FOM with a proposal that quadruples the size definition of "local, well-defined community."
A variety of legal experts and political pundits have pored over the lawsuit filed by the Independent Community Bankers of America (ICBA) against the agency's MBL rule and pointed to some fun facts about the filing.
Unlike most lawsuits against regulators, ICBA is taking a starring role. What is far more commonly done is that a trade group will find one or two institutions who agree to take the leading role. Credit unions are familiar with this. When the decision was made to file suit against the IRS over the Unrelated Business Income Tax (UBIT), neither CUNA nor NAFCU acted as the plaintiff. A couple of credit unions affected by IRS' interpretation of UBIT agreed to serve as plaintiffs.
The theory behind this practice is that it reduces the chances a judge will toss out the case because the plaintiff doesn't have the standing to sue. It is interesting that ICBA has eschewed this long-standing precedent.
Though at press time ICBA had not yet officially announced its intent to sue the agency over its FOM rule, I think it's a good bet the trade group will move forward with that, either by amending its existing MBL suit or filing a second one. Either way, I can't help wondering if this, too, might not wind up being another case of be careful what you wish for.
Because it promises to unite credit unions—and their competing national trade groups—as hasn't been seen since the last time the bankers sued NCUA. Sure, the bankers won that lawsuit back in 1998, but not all victories have the desired effect.
Editor in Chief Lisa Freeman can be reached at
