The American Bankers Association on Wednesday filed a lawsuit against the National Credit Union Administration over a final rule that the ABA says expands credit union membership bounds too far and gives credit unions a competitive advantage.
The rule, finalized in October and published Wednesday in the Federal Register, will ease restrictions on geographical boundaries governing federal credit union membership.
The lawsuit, filed in U.S. District Court for the District of Columbia, sets off the latest legal skirmish between credit unions and banks. Credit unions say the new rule will expand access to services in underserved communities. Banks, on the other hand, argue that credit unions market themselves as the little guy’s financial institution while expanding their foothold and enjoying a tax exemption.
“The final rule risks further increasing the industry’s tax exemption, which is already worth more than $27 billion over the next 10 years,” said Rob Nichols, ABA president and chief executive, in a statement.
The Credit Union National Association, a trade group, called the lawsuit a “meritless attack from bankers.”
“The NCUA acted well within its authority when it issued its field of membership rule,” said CUNA President and Chief Executive Jim Nussle in a statement, adding that the suit “ignores both the law and the NCUA’s authority to regulate credit unions.”
ABA has sued NCUA successfully three times, Nussle’s group said, adding that it supports the Independent Community Bankers of America’s recent lawsuit against NCUA over a business lending rule and plans to file an amicus brief in the case. That rule, finalized in February, lays out commercial lending requirements for federally insured credit unions with an exception that ICBA said strays beyond congressional intent.
ABA also opposes a separate NCUA proposal that would quadruple the population limit on credit union membership fields to 10 million. Comments on that proposal are due Friday.