WASHINGTON—A lawsuit is likely from the banking industry against NCUA over its just-passed field-of membership rules, according to both credit union trade groups.
“We expect that the bankers will launch a judicial challenge, and as (CUNA President and CEO) Jim Nussle said late last week, we will be there to defend this rule and NCUA’s actions,” said CUNA Chief Advocacy Officer Ryan Donovan.
As CUToday.info reported last week, immediately following NCUA passing the FOM final rule the Independent Community Bankers of America expressed what it is calling “strong opposition” to the new FOM rule, claiming that the agency has again demonstrated its “credit union industry cheerleading status.”
CUNA and NAFCU, however, have said the rule is consistent with the Federal Credit Union Act, the Administrative Procedures Act, and the Credit Union Membership Access Act.
The rule “would drastically expand the powers of tax-exempt credit unions beyond their statutory limits,” the ICBA said, adding that it is “reviewing the final and proposed rules and will determine appropriate next steps to stop the tax-exempt credit union’s excessive mission creep.”
The ICBA did not say if a next step would be a lawsuit.
NAFCU told CUToday.info that it continues to support the legality of rule.
In a letter to Senate Majority Leader Mitch McConnell, Senate Minority Leader Harry Reid, Speaker of the House Paul Ryan and House Minority Leader Nancy Pelosi, NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt shared that the trade association "firmly believes that NCUA’s actions are well within the agency’s existing legal authority.”
Hunt noted that the ICBA has a history of suing on field of membership.
“They did it in Utah and they did it in Pennsylvania. So it is certainly likely that they will sue (on the new FOM rules) as well,” said Hunt, adding that NAFCU will stand behind NCUA in supporting the final rule as well as the recent FOM proposal.
The bankers have currently have litigation pending against NCUA over its recently passed member business lending rules.