BLOOMINGTON, Minn.—NCUA Board Member Rick Metsger is speaking out against the decision last week by a federal judge to strike down two provisions of NCUA’s field of membership rule.
Speaking Thursday at the Minnesota Credit Union Network Annual Conference, Metsger said the judge overstepped the court’s bounds.
As CUToday.info reported, Judge Dabney Friedrich in the U.S. District Court for the District of Columbia, upheld two challenged portions of NCUA’s field of membership rule and struck down two provisions in a lawsuit filed against the agency by the American Bankers Association in late 2016. The provisions declared to exceed the NCUA's statutory authority include those that automatically qualify a combined statistical area (CSA) with fewer than 2.5 million people to be a local community and the increase to one-million people in the population limit for rural districts.
CUToday.info has analysis of the judge's decision here.
“Last week a federal district court judge issued a split decision on the four provisions the ABA challenged, upholding two of them, but overturning the other two,” said Metsger. “As is often the case in Washington, the judge got it half right. The NCUA has 60 days to decide whether to appeal the judge’s decision. We are consulting with the Department of Justice, which represents the agency in federal court, and I have encouraged agency staff to consider all legal and regulatory options to address the court's decision.
Metsger said the judge’s decision failed to give due consideration to several key provisions in the Federal Credit Union Act, particularly as amended by the Credit Union Membership Access Act of 1998.
“The mission of the NCUA under the Federal Credit Union Act is to create a nationwide system of cooperative credit for provident and productive purposes, especially for persons of modest means,” said Metsger. “It is an established fact that the residents of rural areas are persons of modest means, whose incomes and prosperity lag behind the residents of major cities and their suburbs.”
'Financial Deserts'
It is also an established fact that America’s banks are deserting rural America, suggested Metsger.
“An analysis by the Wall Street Journal revealed that in the 12 months ending in June 2017 America’s banks closed more than 1,700 branches across the nation – the biggest decline on record – even though the nation has recovered from the Great Recession.”
When NCUA passed its final field of membership rule in 2016, Metsger said he noted that just as America has many “food deserts,” it is now developing “financial deserts” – areas without access to basic financial services.”
Metsger emphasized that NCUA’s rural district definition is neither arbitrary nor capricious, it is designed to solve “very real” financial access problems for residents of rural America.
“It is also important to note that when Congress passed the Credit Union Membership Access Act in 1998 it required the NCUA to issue a regulation to define the phrase, ‘well-defined local community, neighborhood, or rural district.’ It didn’t say we ‘could’ define the phrase by regulation, it said we ‘shall prescribe’ it,” said Metsger. “It further gave the agency broad authority to make, “any determination with regard to the field of membership of a credit union…” and to establish, “the criteria applicable with respect to any such determination.”
'Arc of History'
While Metsger said he is grateful that the vast majority of NCUA’s 2016 field of membership rule remains intact, the two provisions that have been overturned are important, not just to credit unions, but to consumers across America.
“The protectionist desires of the bankers notwithstanding, all Americans should have the right to choose a not-for-profit credit union as their financial services provider. This battle is ultimately about freedom of choice, and I will always stand on the side of the consumer,” he said.
While Metsger said he cannot predict what an independent branch of the federal government will ultimately decide, he said he is confident that “a unanimous and bipartisan NCUA faithfully executed the will of the Congress in passing the Federal Credit Union Act and the Credit Union Membership Access Act. The American people have voted with their feet, and their dollars, by continuing to join credit unions in record numbers, and by continuing to invest in them, and borrow from them for provident and productive purposes. The arc of history may be long, but it bends towards greater access, not less.”