In a heated public exchange Thursday, regulators once again tabled debate over a proposed rule that would impose community lending requirements on geographically based credit unions.

National Credit Union Administration Board Members Yolanda T. Wheat and Dennis Dollar voted for the delay, over the strenuous objections of Chairman Norman E. D'Amours. It was the third consecutive monthly meeting in which the board derailed debate over the issue.

Mr. D'Amours, a proponent of greater credit union involvement in low- income communities, argued that passage of the rule might convince Congress not to impose statutory requirements. He cited as evidence a letter urging approval from six lawmakers, including Rep. Joseph P. Kennedy 2d, D-Mass.

"It's a pressing issue," said Mr. D'Amours. "We're being importuned to address it not only by the realities of community expansions, which are growing significantly, but also by people who I think have the credit union interest at heart."

Mr. Dollar disagreed, saying there is no pattern of geographic discrimination by credit unions and that the NCUA already has the tools necessary to enforce communitywide lending.

"The board requires converting credit unions to come forth with a business plan that shows how they're going to serve the entirety of the community, and we hold them accountable for that within our present regulation," he said in an interview after the meeting.

Mr. Dollar added that the proposed rule would lead to "quotafication."

"It could create a situation whereby a credit union put in their business plan that they were going to penetrate a certain community by 45%. But then at examination time, if they had only penetrated it by 42%, they would be subject to very significant reporting and perhaps disciplinary actions," even if the cause of the missed goal was a plant failure or some other uncontrollable event, he said.

Ms. Wheat argued that the board should wait for advice from NCUA's field-of-membership task force before acting. "I think it's in the best interests of this agency and credit unions ... that recommendations to amend the chartering manual be done in a complete and consistent manner and not piecemeal."

The tension between board members was tangible. After Ms. Wheat motioned to table debate on the community lending rule, Mr. D'Amours continued talking. She interrupted him to say that he was violating Robert's Rules of Order, a suggestion Mr. D'Amours rejected.

In other business, the board also postponed debate on a regulation that would clarify rules on business loans. The NCUA also allowed three occupation-based credit unions in Texas to convert to community-based charters and permitted an Idaho credit union to switch from federal deposit insurance to private insurance.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.