The letter added that regulatory overreach is the only path forward for “this ever-expansive industry.”

“As a matter of tax policy, (the) NCUA's quasi-legislative proposal greatly impacts your respective Committees' prerogatives, and in reality means less money to support education, public safety, teachers, and highways,” the group said in the letter dated Feb. 5.

Strife between the industry and its trade groups are not new and a potential battle between the two could reexamine the debate that took place over H.R. 1151 almost two decades ago. The ABA also filed a strong worded comment letter to the NCUA on Feb. 5 opposing the FOM rule.

“I believe that the ABA's approach also suggests that the trade association is prepared to revisit the CUMAA-like battle again under the current circumstances, both in the Congress and in the courts,” Olympia, Wash.-based consultant Marvin Umholtz said.

Umholtz warned tactics used by credit unions in 1998 to fend off bankers won't work in the current Congress.

“And the credit union industry in 2016 certainly has little resemblance to the one in 1998,” he added.

ABA Executive Vice President/Chief Economist James Chessen said in his trade association's comment letter the FOM rule would effectively render the concept of a common bond among credit union members meaningless. By advancing the FOM proposal, the NCUA board overstepped its regulatory authority, sidestepping FCUA requirements of industry growth and replacing its own judgment for that of Congress, he added.

Chessen also called into question the NCUA's authority to implement the proposed changes, including amending the definition of a service facility to include online financial services, such as computer-based and mobile phone channels.

In contrast, credit union trade associations said in their comment letters the rule doesn't go far enough. In NAFCU's comment letter, President/CEO Dan Berger called for FOM reform that would remove the service facility requirement for multiple common bond chartered credit unions or allow online services to fulfill that requirement in underserved areas. Berger also recommended the NCUA eliminate or increase the core-based statistical area population.

“Credit unions believe that so long as a Metropolitan Division, or any defined area, regardless of size, shows evidence of commonalities, such as shared routine interactions, work experiences and interests essential to supporting a strong credit union, such proposed areas should not be so disproportionately denied simply because they exceed 2.5 million people,” Berger wrote.

NAFCU also wrote in its letter that the NCUA could more often utilize its emergency merger authority when two credit unions of unlike charters wish to merge.

“NAFCU's members have indicated that (the) NCUA often waits until a credit union is irreparable economic distress before it will authorize an emergency merger,” Berger wrote.

CUNA President/CEO Jim Nussle wrote in his trade's comment letter that more can be done to put the federal charter on equal footing with most states.

Regarding mergers, Nussle wrote that the NCUA should facilitate mergers between credit unions with unlike fields of membership when there is no desire to retain the merged credit union's field of membership. The NCUA should establish a process that eliminates the need for a conversion, Nussle wrote.

“The NCUA could simplify this process by providing clear guidance stating the merged credit union can change its FOM and approve the merger in one step,” he wrote. “An update to NCUA's chartering manual would be required for the charter conversion to be completely removed from the process.”