ALEXANDRIA, Va.—The NCUA board on Thursday is expected to finalize a rule to make its 2016 field of membership rule consistent with last year's decision from the U.S. Court of Appeals for the D.C. Circuit in the lawsuit brought by the American Bankers Association (ABA).
In addition, the board will propose a rule to transition credit unions to the current expected credit loss (CECL) standard.
As CUToday.info reported, the D.C. Court of Appeals ruled largely in favor of the NCUA in the ABA lawsuit in August 2019 and sought additional explanation of the NCUA's decision to eliminate the urban-core requirement for local communities based on core based statistical areas. Putting an end to the litigation, the U.S. Supreme Court earlier this month declined ABA's petition to hear the lawsuit after the appeals court declined to rehear the case en banc.
What Rule Would Do
To address the appeals court's concerns, as CUToday.info also reported, in October 2019 NCUA proposed a rule that would:
- Re-adopt a provision to allow an applicant to designate a combined statistical area (CSA), or an individual, contiguous portion CSA, as a well-defined local community, provided that the chosen area has a population of 2.5 million or less
- Provide further explanation and support for eliminating the urban-core requirement for local communities based on CBSAs, as provided for in the 2016 FOM rule; and
- Provide express authority for the NCUA to reject a credit union application for CSAs and CBSAs if the agency determines that the FOM selection reflects discrimination (the ABA had argued that the 2016 rule would allow credit unions to engage in redlining; this addresses that concern)
FOMs Reinstated
Following the Supreme Court decision, the NCUA began reinstating FOMs that were removed due to litigation and resumed processing the rural district FOM applications for those credit unions that had them held during the litigation period. It also began accepting new applications for those fields of membership.
Other items on the agenda for the July 30 meeting include a proposed rule related to the operating fees federal credit unions pay to the NCUA each calendar year, a request for comment on overhead transfer rate (OTR) and operating fee methodologies, and a 2020 mid-session budget briefing.
The board meeting is slated to begin at 10 a.m. ET and will be livestreamed on NCUA's website. CUToday.info will provide complete coverage.