Court Hears NCUA Appeal In FOM Case; Outcome Could be 'Tough'

WASHINGTON–The D.C. Circuit Court of Appeals heard oral arguments yesterday in a lawsuit by the American Bankers Association that challenges NCUA’s new field-of-membership rule.

dc circuit

DC Circuit Court

CUNA, NAFCU and CUNA Mutual have all filed briefs supporting the new rules. But NAFCU CEO Dan Berger cautioned credit unions meeting in San Diego that the decision could be "tough" and there's a "chance to lose."

At issue are field of membership rules finalized by NCUA in October of 2016. As reported here, the ABA filed suit in December 2016, saying at the time, “NCUA’s rule ignores statutory requirements at the expense of taxpayers, small banks and the communities those banks serve. 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.”

What Court Ruled

In March of 2018 the U.S. District Court of the District of Columbia upheld two of the challenged portions of the rule, but struck down two other provisions.

Struck down were provisions on NCUA's statutory authority to automatically qualify a combined statistical area (CSA) with fewer than 2.5 million people to be a local community and the increase to one-million people the population limit for rural districts.

Upheld were portions of the rule concerning the omission of core areas from Core-based Statistical Areas and the provision allowing credit unions to serve adjacent areas. 

The appeal was heard by a three-judge panel.

NAFCU's Berger, in response to an audience question at NACUSO's annual meeting, said of the potential court decision, "From our standpoint it’s going to be tough. It has a chance to lose. Those who have invested a lot of money and advertising, hopefully, they will grandfather some of that in if it doesn’t go our way. I think it’s going to be an uphill battle."


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Copyright Year: 2019
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