NCUA Won't Require CUs to ‘De-List’ Members Based on Voided Rules
In court filing, NCUA says de-listing members “would serve only to punish individuals and entities who did nothing wrong."
The NCUA will not require credit unions to “de-list” members who may have joined their credit union based on rules that have now been voided by a federal judge, the agency said in documents filed in federal court on Thursday.
De-listing those members “would serve only to punish individuals and entities who did nothing wrong and who were not parties in this litigation,” the NCUA said, in its filing in the U.S. District Court for the District of Columbia.
U.S. District Judge Dabney Friedrich on March 29 threw out a provision of the agency’s new field of membership rule that increases to one million people the population limit for rural districts. She also threw out a provision of the rule that automatically qualified a “Combined Statistical Area” or a contiguous portion of it with fewer than 2.5 million people to be a local community.
The rule was challenged by the American Bankers Association, who argued that the rule violated federal law governing credit union membership.
An NCUA spokesperson tells CU Times that 42 credit unions were affected by the ruling.
The NCUA is still considering whether to appeal the ruling.
However, the NCUA said that the ABA will not seek to require the agency to de-list members who may have been affected.
The NCUA said in its federal court filing that Freidrich did not discuss the effect of its ruling on community charter expansions that were granted before her ruling.
The agency said that while the ruling remains in effect, it will not grant any new community charters that would be based on the vacated rule. And the agency has instructed affected credit unions not to accept new members who became eligible based on the voided rule.
“By contrast, Defendant does not believe that the Court’s order should be read to mandate that affected credit unions de-list members who became members prior to the Court’s decision,” the agency said.
CUNA agreed with the NCUA decision, saying that credit unions relied rules that were valid at the time they enrolled new members.
NAFCU said the trade group is pleased that the NCUA is considering an appeal of the ruling.