NCUA lays out legal defense of contentious membership rule

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The National Credit Union Administration on Thursday filed a brief in its ongoing appeal of a court ruling overturning parts of its field-of-membership rule.

The U.S. Court of Appeals’ D.C. Circuit earlier this year struck down two of the four provisions in the FOM rule the NCUA board passed in October 2016. The regulator subsequently filed an appeal of that decision, which was followed up with a cross appeal by the American Bankers Association that challenged sections of the ruling favorable to the NCUA.

Thursday’s 80-page brief includes background on the issues and details on the NCUA’s definitions of what constitutes a rural district, local community and combined statistical area, all of which pertain to how credit unions would define broadened fields of membership within the confines of the rule.

The brief argues that Congress “explicitly designated” NCUA authority to define field of membership areas within the Federal Credit Union Act “and nothing within the challenged definitions is manifestly contrary to the statute.”

The National Association of Federally-Insured Credit Unions on Thursday quickly issued a statement backing the NCUA.

“NAFCU remains a staunch advocate of the NCUA's legal authority to modernize credit unions' fields of membership, and we strongly support the NCUA during this appeal process,” Dan Berger, NAFCU’s president and chief executive, said in the statement. “We will continue to support the agency's efforts to keep credit unions competitive and allow them to grow, and will be filing an amicus brief to support the NCUA in the FOM lawsuit."

The Credit Union National Association and CUNA Mutual Group are both expected to file an amicus brief along with NAFCU, a move the trade associations have undertaken together in the past.

The American Bankers Association didn't buy the NCUA's argument.

“We strongly disagree with NCUA’s position, and we’re confident that the D.C. Circuit will again reaffirm that the agency has overstepped its legal authority," a trade group spokesman said in a statement.

Oral arguments in the case have not yet been scheduled.

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