WASHINGTON—NCUA is considering an appeal to the U.S. District Court for the District of Columbia’s ruling that vacated two provisions of the agency’s field of membership rule.
The agency shared its consideration in a notice to the court that outlines how NCUA will implement the recent decision.
The notice indicates NCUA has instructed credit unions to not accept any new members who would only be eligible under the vacated portions of the FOM rule. However, credit unions can continue to serve existing members who would have been ruled ineligible by the court's decision, so long as they became members by April 4.
The NCUA argued that if the court's decision meant credit unions could no longer serve existing members, it would "punish individuals and entities who did nothing wrong and who were not parties in this litigation." The agency cited the Federal Credit Union Act's "once a member, always a member" provision and previous practice in its reasoning.
Additionally, while the court’s ruling remains in effect, the agency said it will not grant new community charters under the invalidated provisions.
The notice also informed the court that the American Bankers Association (ABA), who brought the lawsuit, had been notified of the NCUA's implementation plans and did not intend to challenge it.
In December 2016, the ABA filed suit against the NCUA over its FOM rule, which took effect in February 2017.
NAFCU filed an amicus brief supporting NCUA's FOM rule last June. The association said it continues to believe the NCUA's FOM rule is well within the agency's legal authority and is in keeping with the Federal Credit Union Act. NAFCU stands behind the NCUA's decision to issue the final rule, which was the first meaningful update to the agency's FOM rules over the past decade, the trade association said.
CUNA, which noted that it has been a vocal defender of the NCUA against any challenges to their express authority to promulgate the rule, believes the approach is fair given the circumstances and the reliance on the valid law that stood at the time such members joined a credit union.
“The NCUA is the prudential regulator for the credit union system, and we support their delegated authority to promulgate rules and regulations under which credit unions can serve their member-owners,” said President/CEO Jim Nussle. “CUNA recently completed a very rigorous statistical analysis finding that broader fields of membership unambiguously create substantial benefits to credit unions, their members and the overall safety and soundness of the financial sector.”