Having Secured Court Ruling, NCUA Will Phase in Field of Membership Rule
A federal court weighs in on a long-standing dispute between banks and credit unions.
With a federal appeals court ruling in hand, the NCUA will begin phasing in its Field of Membership rule, board Chairman Rodney Hood announced Wednesday.
Hood said the agency must implement the rule in phases because one section of the rule remains subject to additional judicial rule.
The U.S. Court of Appeals for the District of Columbia ruled last month that Congress gave the NCUA broad authority in issuing rules governing fields of membership.
The American Bankers Association and state banking associations had filed suit challenging the rule and a U.S. District Court voided portions of the rule.
The appellate court overturned much of the lower court’s ruling.
However, the court also ruled that the NCUA must better explain the part of its rule stating that credit unions may serve core-based statistical areas without serving the area’s urban core.
Hood said the NCUA will propose a rule that clarifies that section of the rule and that public comment will be solicited on it.
Hood said the agency will allow federal credit unions to submit applications seeking rural districts serving regions that include one million people and meet other rules.
“The NCUA will act on such applications at the appropriate time,” he said.
Hood said the NCUA will announce guidance shortly dealing with another section of the FOM rule that was upheld by the appellate court. That section of the rule allowed charters serving Combined Statistical Areas or a portion of an area, subject to a 2.5 million-person limit.
An NCUA official Thursday confirmed that the board will also consider a proposed rule by the end of the year governing the purchase of a bank by a credit union.
Hood first said the rule would be forthcoming in an interview with the Wall Street Journal.
Since January, there have been 11 banks purchased by credit unions.
Banking trade groups have said they are alarmed by those purchases, contending that credit unions are misusing their tax-exempt status to pursue excessive growth.