Seizing the offensive in its battle with banks, the National Credit Union Administration has made it easier for people to join credit unions.
The agency's rules, adopted unanimously Thursday, allow an occupation- based credit union to serve an entire profession, rather than just employees at a single company.
In addition, credit unions with members at several local companies will be able to retain those members by converting to community-based institutions.
The rules came in a response to a July 30 federal appeals court ruling that said all members of a federal credit union must share a single, common bond. Enforcing that decision, a federal judge last month barred 3,586 occupation-based credit unions from adding new customers who don't share a common bond with core members.
"The board fully recognizes that this is not fixed, but this will substantially and significantly alleviate some of the pain caused by the ... decision," said NCUA Chairman Norman E. D'Amours.
Banking industry representatives were quick to criticize the rule as an end-run around the July decision in the AT&T Family Federal Credit Union case.
"This is a totally inappropriate role for a regulator," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "Their role is to uphold the law, and not be a cheerleader for the industry. The NCUA is trying to finagle its way around the very clear court decision."
NCUA officials claimed they are on solid legal ground. General Counsel Robert M. Fenner said according to the appeals court decision, the NCUA could adopt a more expansive definition of an occupation-based credit union.
"This rule is perfectly within the law as it is currently construed by the court of appeals decision, and totally defensible," he said.
Credit union executives said the changes will allow them to recover some of the member groups barred by the decision of the appellate court for the District of Columbia Circuit.
"NCUA has taken strong action to work within the federal credit union act to help credit unions serve American consumers," said Roger Ballard, president of Network Federal Credit Union in Las Vegas.
"It's not the ultimate solution, but it does provide some hope for some credit unions," added Patrick Keefe, spokesman for the National Association of Federal Credit Unions.
Bankers are expected to sue the agency over the rule changes, but industry representatives refused to commit on Thursday.
"This is something we need to talk to our legal people about," said James M. Culberson, president of First National Bank and Trust Co., Asheboro, N.C., which filed the AT&T Family challenge. "It sounds to me like they are still trying to do the common bond like they were before."
The rule changes allow a credit union to serve employees at different corporations that produce similar products or offer similar services. The only restriction: the groups must be located roughly within 25 miles of the credit union in urban areas, and within 100 miles in rural areas.
For example, all local medical professionals within a credit union's operational area - rather than the employees of a particular hospital - would be able to join the institution.
The agency also expanded the community credit union charter to allow institutions to serve occupational, associational, and community groups within well-defined areas that have populations of less than a million. If the population of the area to be served is larger, the credit union would have to submit more detailed information to NCUA.
The new rules are effective immediately, but comments may be filed with the NCUA through Feb. 1.
Jaret Seiberg contributed to this story.