WASHINGTON–Both NCUA and the American Bankers Association have until today to file additional paperwork in a lawsuit over field of membership that at a hearing earlier this week had a judge asking tough questions of the agency.
The questions came as part of a lawsuit filed by the American Bankers Association against NCUA over FOM rules the agency approved in 2017.
Judge Dabney L. Friedrich particularly focused on two changes made by the agency, including a provision allowing all or part of a combined area to qualify as a field of membership as long as the population doesn’t exceed 2.5 million, and a second provision that increases the population limit for rural districts to one million.
During a hearing Judge Friedrich asked, for instance, how the proposal would allow Salt Lake City to be considered part of a single district for a credit union’s rural field of membership. Friedrich noted Salt Lake City is a large metropolitan area that is surrounded by rural districts, and questioned why the NCUA rule doesn’t carve out such a city.
In addition, Friedrich also raised questions around how five states — Wyoming, Alaska, North Dakota, South Dakota and Vermont — could qualify as well-defined rural districts under the regulation.
In response, NCUA’s attorneys said the agency deserves some room to maneuver, as it was granted the right to determine appropriate local or rural district as part of the Credit Union Membership Access Act of 1998. Moreover, the court was told, NCUA selects areas that it believes make the most economic sense.
“If you exclude population centers, you’re not going to have credit unions serving that district,” the court was told.
Friedrich responded that credit unions should be able to “survive and grow,” but that NCUA also shouldn’t be permitted “to rewrite the statute.”