The banking industry's long-simmering feud over credit union membership practices took center stage Monday at the Supreme Court.

The justices appeared undecided in National Credit Union Administration v. First National Bank and Trust, of Asheboro, N.C., which questions whether 3,586 occupation-based credit unions may serve employees at multiple companies.

During the hour allotted to oral arguments in the case, the justices spent most of their time debating whether banks have the legal right to challenge interpretations by NCUA. If the court finds that banks lack standing, they will lose the case. The justices only briefly discussed the case on its merits-whether federal law requires all members of an occupation-based credit union to share a single, common bond.

Both parties predicted victory. A decision is expected this winter.

"The arguments went very well," said Michael S. Helfer, who represented the American Bankers Association. "We won this case in two circuit courts and we are very confident in our position."

"I have to give the edge to the credit union side," NCUA Chairman Norman D'Amours said. "I think we have a good chance both on standing and on the merits."

Also on Monday, the ABA opened a new front in its war against credit union membership practices, challenging NCUA's decision to let a community credit union serve all of Ventura County, which is located just north of Los Angeles. All federal credit unions are either occupation- or community- based.

NCUA's Jan. 29 decision allowing Point Mugu Federal Credit Union to serve all of the 670,000 residents in the 1,846-square-mile county was "arbitrary, capricious, and constitutes an abuse of agency discretion," the ABA and the California Bankers Association argued.

The bank groups also said NCUA supported its claim that Ventura County is a single community by noting that residents are predominantly white. Race-based designations violate the Equal Credit Opportunity Act, they said.

They asked the U.S. District Court here to void the Point Mugu order and bar the agency from approving similar deals.

"If all of Ventura County can be a community, then clearly there is no common bond," said Edward L. Yingling, the ABA's chief lobbyist. "A credit union trying to serve an entire county is trying to act like a bank."

NCUA spokesman Robert Loftus declined to comment late Monday on the suit, saying he has not seen a copy of it.

Point Mugu President Ronald L. McDaniel said he has not seen a copy of the suit either. But he said the conversion was completely legal. "We worked two years to get this approved," he said. "We are convinced the county is a well-defined community."

The Supreme Court battle involves AT&T Family Federal Credit Union, a $500 million-asset institution in Winston-Salem, N.C., that serves employees at more than 300 companies. The ABA and four North Carolina banks challenged AT&T's expansion, arguing that the Federal Credit Union Act requires all members to share a single, common bond. The federal appeals court in Washington sided with the banks.

During the Supreme Court argument, the banks had trouble showing they have a legal right to sue. To have standing, ABA had to demonstrate that Congress intended for the Federal Credit Union Act to address competition between banks and credit unions.

As proof, Mr. Helfer said that banks specifically asked for and received restrictions in the 1934 law that limits credit union growth. Also, he noted that NCUA barred multiple common bonds for 50 years.

But Justice Stephen Breyer didn't buy the argument. "I find it difficult to see how your clients have standing," Justice Breyer said. "I do not find one word to suggest this statute was intended to protect banks."

In fact, John R. Roberts Jr., who represented the Credit Union National Association, said Congress could not have intended the law to restrict credit union competition because banks in 1934 were not interested in making small consumer loans.

But other justices said no one would challenge NCUA rulings if banks were shut out of court. "Your standing argument means there is no logical challenger," Justice Sandra Day O'Connor told the government.

"The most interested person would be the injured person, which is the bank," Justice Anthony Kennedy said.

The bankers appeared to fare much better when debate centered on the merits of the case, even winning support from Justice Breyer. "You could have one credit union for everyone who is employed except for sole proprietors," he said. "You could have 200 million people in one credit union."

But Seth P. Waxman, the acting Solicitor General, said the court should rely on NCUA's interpretation because the law is ambiguous. "The agency's interpretation must be given deference," he said.

After the argument, officials from both industries tried to put their best spins on the case.

Kenneth L. Robinson, president of the National Association of Federal Credit Unions, said low-income consumers would be devastated if the justices sided with the banks. He noted that 50% of the 1.6 million members of Navy Federal Credit Union hold less than $100 in their account, and 25% have less than $10 in their account, he said.

"That's the people we are concerned about," he said. "That's why we want to win this case."

"This is simply an attempt by the banking industry to muscle out a competitor," Mr. D'Amours agreed. If banks win, residents of inner city and rural areas would lose access to financial services, he said.

But banking industry officials said they are trying to protect taxpayers, who are subsidizing credit unions.

Michael C. Miller, president of First National Bank and Trust Co., one of the plaintiffs in the case, said AT&T Family used its tax-exempt status to capture deposits and loan business in his area.

"I don't understand why there has to be a tax-free choice for banking," he said. "There's not a tax-free choice for grocery stores. There's not a tax-free choice for gasoline companies."

Mr. Helfer said a bank victory would not necessarily mean the government must dismantle the 3,586 occupation-based credit unions. "It will be up to NCUA to develop a plan," he said.

Separately on Monday, the justices refused to consider Astoria Federal Savings and Loan v. New York, which involves whether New York must rebate taxes to banks that hold Treasury bonds and other securities.

It also rejected Williams v. Franklin First Federal Savings Bank, which questions whether a lender is responsible for back taxes and damages to a property that it foreclosed on and then later returned to the borrower.

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