The Independent Community Bankers of America (ICBA) filed an amicus brief supporting the American Bankers Association’s (ABA) lawsuit challenging the National Credit Union Administration’s (NCUA) rule to expand the service areas where credit unions can do business.
The NCUA’s October 2016 field-of-membership rule ignores statutory requirements on membership by concluding that combined statistical areas are presumptively proper fields of membership for community credit unions, according to the ABA. The association also takes exception to the rule which says that a “rural district” can include vast regions that in many instances include areas that are not rural.
The brief from ICBA and its state affiliates said the agency’s deliberate violation of statutory restraints to enlarge credit unions’ geographic reach is part of its ongoing campaign to promote the credit union industry.
“The NCUA’s expansive field-of-membership rule is another example of this captive regulator inappropriately and illegally extending the industry’s taxpayer-subsidized competitive advantage over taxpaying community banks,” ICBA President and CEO Camden Fine said. “If allowed to stand, the NCUA’s action will enable credit unions to unlawfully exploit their significant tax advantage by flouting congressional intent.”
As ICBA noted in a February 2016 comment letter to the NCUA, the agency’s actions erode any meaningful distinction between tax-exempt credit unions and taxpaying community banks, further undermining any justification for the credit union tax exemption.
ICBA argues that the consequences of NCUA’s actions could result in larger credit unions serving larger and more geographically diverse areas. ICBA and its affiliated state associations urge the court to grant ABA’s motion for summary judgement.