NCUA, CUNA, NAFCU, SEFCU submit rebuttal in ABA lawsuit

WASHINGTON-The Department of Justice (DOJ) submitted its brief for NCUA in the ABA’s FOM appeal last week. CUNA, NAFCU, and State Employees Federal Credit Union, Albany, N.Y. filed a separate brief as co-defendants in the case. The ABA charged that NCUA overstepped the congressional bounds created in the Credit Union Membership Access Act (CUMAA) when creating Interpretive Ruling and Policy Statement (IRPS) 99-1 of its field of membership and chartering manual. “In the apparent belief that if it fires enough bullets, perhaps one will actually hit a target, ABA raises a host of disconnected issues and claims that NCUA has somehow managed to get nothing right,” the joint CUNA/NAFCU/SEFCU brief read. “The idea that NCUA could so consistently fail to conform to the statute is implausible.” “What the bankers have done is file a brief which is a grab bag of miscellaneous and disconnected arguments, which are a desperate effort to find some shred of a case for which they can attack NCUA for anti-competitive purposes,” CUNA General Counsel Eric Richard said. “It is really a scatter shot approach in which they spray bullets at everything in the hope that, maybe by accident, they’ll hit something.” The bankers made nine basic points in their brief. The one they seem to be relying on the most is the fact that U.S. District Court Judge Colleen Kollar-Kotelly was never provided a certified copy of the administrative record by NCUA. According to both DOJ/NCUA’s and the CUNA/NAFCU/SEFCU briefs, this document was not required under the Administrative Procedure Act because it was a rulemaking procedure and the banks provided no factual evidence that a violation occurred. “Rather, the complaint alleged only that various provisions of the Final Rule violated the plain language of the statute or represented an unreasonable interpretation of an ambiguity contained in the statute,” the DOJ/NCUA brief read. The other claims accused NCUA of overstepping its regulatory bounds in interpreting CUMAA and creating IRPS 99-1. According to the bankers, NCUA’s interpretations of 1) the calculation of a group’s membership; 2) a group’s ability to form its own credit union; 3) encouraging the formation of new credit unions when practicable; 4) permitting of voluntary mergers; 5) the grandfather clause; 6) the “reasonable proximity” provision; 7) community credit union standards; and 8) taking ethnicity of a group into account in “local community” decisions. Both briefs noted that because the law was not explicit in these areas, NCUA was entitled to a “reasonable” interpretation. Under Chevron U.S.A. Inc. vs. Natural Resources Defense Council, Inc. (467 U.S. 837 (1984)), the ABA must show that NCUA’s interpretations were contrary to the plain language of the act or clearly expressed legislative intent. According to the credit union defendant, the ABA did not do this. “We think all of those actions are clearly supported by the underlying statute and the authority that Congress conferred on NCUA as the principle regulator of credit unions,” NAFCU Senior Vice President and General Counsel Bill Donovan. “The fact of the matter is very simple. Congress has charged the National Credit Union Administration with writing the rule and regulations that will apply to how credit unions provide services to members and who can be members of credit unions. Congress did not confer that authority on the American Bankers Association.” [email protected]