WASHINGTON–Saying NCUA has again demonstrated its “credit union industry cheerleading status,” the Independent Community Bankers of America has expressed what it is calling “strong opposition” to NCUA’s newly passed field of membership rule.
CUNA and NAFCU, however, say 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 trade group said. “ICBA 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 bankers’ group didn’t say whether those next steps would include a lawsuit. In September the ICBA filed a lawsuit against NCUA over its recently passed rules that expanded member business lending authority by credit unions.
“NCUA’s action today is the latest example of the captive regulator inappropriately and illegally extending the industry’s taxpayer-subsidized competitive advantage—further demonstrating its credit union industry cheerleading status,” said ICBA President and CEO Camden R. Fine in a statement. “If credit unions want to eliminate the common bond requirement and operate like banks, they should be taxed like them and required to meet the same set of regulatory standards. They can’t have it both ways.”
Earlier this year the ICBA filed a comment letter that said NCUA’s planned expansion of field-of-membership rules would violate the Federal Credit Union Act and further erode any meaningful distinction between tax-exempt credit unions and taxpaying community banks. The group said it will continue to fight what it called “egregious expansion.”
“The NCUA should focus on enforcing the law—not carrying water for the industry it is charged with regulating,” Fine said in the statement. “The action taken today is yet one more example of this regulatory cheerleader’s focus on agency self-preservation. ICBA will continue to push back forcefully against the NCUA’s rubber stamp approach to regulating the credit union industry. The financial system should not operate with regulatory agencies like the NCUA having their thumbs on the scales.”
CUNA responded quickly to the bankers' statements.
“The new field of membership rule and the new proposed rule are fully consistent with the Federal Credit Union Act and the Administrative Procedures Act," said President/CEO Jim Nussle. "They are also fully consistent with the intent of the Credit Union Membership Access Act, which I voted for in 1998 when I was in Congress. Our friends in the banking industry appear to be ready to launch another quixotic legal challenge to NCUA’s actions. CUNA is prepared to defend this rule and we will take all necessary measures to do so.”
NAFCU Thursday sent a letter to the House and Senate stating that the trade association believes NCUA is on sound legal footing.
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 "continues to hear from our members that NCUA’s current FOM rules and regulations have unnecessarily inhibited their ability to serve their communities. Additionally, NAFCU members believe that the federal credit union charter must keep pace with changes in state laws, technology, and the progressiveness of the financial services industry. We believe that these new rules from NCUA provide constructive regulatory relief under the agency’s current authority by streamlining its chartering and FOM procedures, as well as changing its arbitrary regulatory framework.
"NAFCU firmly believes that NCUA’s actions are well within the agency’s existing legal authority," continued Hunt. "We also believe that there are other areas where credit unions need FOM modernization that Congress must address. A prime example is HR 5541, the Financial Services for the Underserved Act of 2016, which is currently pending action in the House."
Hunt urged support for these efforts to achieve statutory improvements to "outdated FOM restrictions on credit unions."