BIRMINGHAM, Ala.—Former NCUA chairman Dennis Dollar doesn’t believe bankers will be able to win a legal battle challenging NCUA’s revised FOM rules—if that action comes to pass—and feels the agency has even more room to make improvements that would withstand bankers’ efforts.
After the NCUA board Thursday unanimously approved revised FOM rules, the Independent Community Bankers of America blasted the plan, calling it “egregious expansion.”
The bankers’ group didn’t say whether those next steps would include a lawsuit, but did hint it’s an option, as CUToday.info reported here.
In September the ICBA filed a lawsuit against NCUA over recently passed rules that expanded member business lending authority by credit unions.
Dollar, principal at Dollar Associates here, credited the NCUA board for working well together to advance a rule that will help credit unions grow.
"The NCUA board deserves commendation for the steps they took today to help try to bring FOM rules for federally chartered credit unions into more modernization, as most states have already done for their state charters,” said Dollar. “Chairman (Rick) Metsger and Board Member (Mark) McWatters took the lead to make something happen in this crucial area, despite there only being a two-member NCUA board.”
Dollar noted that either board member could have stopped the rule over any provision, but instead worked together, “as a well-functioning governmental agency should, in a bipartisan way to enact a long overdue modernization of the restrictive 2010 FOM rewrite that has driven so many federal-to-state charter conversions.”
Dollar said the final rule, which some might consider “somewhat modest” in comparison to the “much more flexible” FOM rules of 1999 and 2003, is a significant improvement over the 2010 FOM rewrite that it seeks to modernize.
“While the bankers won't like any FOM modernization that brings credit unions into the 21st century, these FOM actions are very reasonable and certainly are well within what is allowed under law for credit union FOM,” Dollar said.
Dollar noted that the new rules don't go as far as the 1999 rules that the bankers challenged in court and lost, nor are they as extensive as the 2003 rules that the bankers didn’t challenge in court.
“In my view, the board could have gone much further under existing statutory authority than either the final rule or the second proposed rule goes—but it is a good, solid step forward in FOM modernization,” said Dollar. “Hopefully it is the first of a number of needed steps to make the federal charter more competitive with the state charters in most states on FOM."