The association filed the lawsuit in the U.S. District Court for the District of Columbia, alleging that 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 an ongoing effort by the NCUA to expand the size and scope of credit unions, the ABA suggested the new rule goes "well beyond congressional limits."
The "rule ignores statutory requirements at the expense of taxpayers, small banks and the communities those banks serve," Rob Nichols, the association's president and CEO, said in a press release. "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 that the NCUA's action would impact 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."
The NCUA is now facing two different legal challenges from banks. The Independent Community Bankers of America recently filed a lawsuit challenging the agency's reform of its member business lending rules.