Rallying on the Supreme Court steps on Monday, credit union and consumer groups blasted banks for trying to limit the growth of nonprofit financial cooperatives.
"The banks' attempt to restrict credit union access is unseemly given the fact they are trying to gouge consumers on fees, and given the fact that they have record profits," said Steve Brobeck, executive director of the Consumer Federation of America.
"The Supreme Court has the ability to create an environment in this country where consumers have a choice," said Alex Hultgren, executive director of the Campus Credit Union Council.
"Banks don't care about students," he added. "They see students as a source of fees."
These groups were among nine that filed briefs Monday supporting the credit union industry's fight in the AT&T Family Federal Credit Union case. The Supreme Court will hear arguments in October on whether the National Credit Union Administration broke the law when it said occupation-based credit unions may serve employees at more than one company.
Michael F. Crotty, deputy general counsel at the American Bankers Association, said he was not fazed by the number of groups supporting the credit unions. "We expect to win on the merits of this, not on the number of briefs filed," he said.
The briefs made three major assertions: that the courts should defer to the NCUA's interpretation of the Federal Credit Union Act, that the banking industry lacks standing to sue over the rule, and that the public benefits from credit union growth.
The National Association of Federal Credit Unions argued that Congress instructed the NCUA to protect the industry from safety-and-soundness problems. The agency responded by authorizing occupation-based credit unions to serve more than one group of employees. Because the NCUA was responding to a congressional mandate, the courts should defer to the agency's decision, the group said.
The Consumer Federation of America said in its brief that Congress has consistently favored credit union expansions. So the NCUA was following the intent of the law when it gave single credit unions permission to serve multiple companies, it said.
Banks lack standing to challenge NCUA decisions because the Federal Credit Union Act does not apply to them, the Credit Union National Association argued in its brief.
"The banks have not shown that Congress sought to protect them from competition with credit unions," CUNA said. "To the contrary, the evidence indicates that Congress saw credit unions as generally serving a market that banks disdained."
The National Association of State Credit Union Supervisors said they expect a stampede of conversions to state charters if the court rules against AT&T Family. Such a stampede would kill the dual charter system and overwhelm state supervisors, it warned. Also, state supervisors said losing the case could cause many large federal credit unions to fail, threatening health of the credit union insurance fund.
A loss also would hurt small businesses and universities that count on credit union services, according a brief filed by the Ad Hoc Small Employers Group, the National Cooperative Business Association, the Campus Credit Union Council, and the Associated Builders and Contractors Inc.
These groups said their members are too small to charter independent credit unions. Their only chance of offering credit union services is to become select employee groups of larger institutions, they said.