WASHINGTON–As expected, the American Bankers Association has filed suit against NCUA over its new field of membership rules. The lawsuit coincides with the publication of the broadened rules in the Federal Register. The suit was filed in federal court.
“NCUA’s rule ignores statutory requirements at the expense of taxpayers, small banks and the communities those banks serve,” said ABA President and CEO Rob Nichols, in a statement. “ABA has successfully sued NCUA three times on past occasions in which the agency exceeded its congressional authority, and we look forward to challenging their latest violation of the law in federal court.”
Details of the new rules, which the NCUA board passed late October, can be found in CUToday.info here. The agency received more than 11,000 comment letters prior to the vote. The rules are scheduled to go into effect on Feb. 6.
In its lawsuit, the ABA said NCUA’s final rule “fails to adhere to the limitations on federal credit unions established by Congress. By exceeding these statutory limitations, the final rule upsets the balance Congress struck between granting federal credit unions tax-favored status and limiting their operations to carefully circumscribed groups or localities that share a common bond.”
Nichols added that NCUA’s action affects all taxpayers by “further increasing the industry’s tax exemption, which is already worth more than $27 billion over the next 10 years. Congress set appropriate limits on credit union activities in return for a tax-exempt status that no other trillion-dollar industry enjoys.”
Nichols went on to call the final rule “part of an aggressive series of actions by NCUA to end-run statutory limits on CUs.
Separately, ABA said it supports a separate pending lawsuit filed by the Independent Community Bankers of America over the agency’s new Member Business Lending rule and said it will file a detailed friend-of-the-court brief in support of ICBA’s litigation.
Former NCUA Chairman Dennis Dollar had earlier predicted to CUToday.info that the bankers would lose if they filed a suit, as reported here.