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(From Credit Union Times) – The American Bankers Association is asking the U.S. Supreme Court to rule that the NCUA’s expansion of its Field of Membership rule is illegal.
In filing its appeal late Wednesday, the ABA is asking the high court to overturn an appeals court ruling that the agency had broad discretion in defining terms in the rule.
“In sum, the agency’s definitions of ‘local community’ and ‘rural district’ are ‘not anywhere near the standard meaning’ of those terms,” the ABA said in its petition.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia had upheld a portion of the of the FOM rule that increased to one million people the population limits for rural districts.
U.S. District Dabney Friedrich had ruled against the agency and said that the agency had exceeded its authority.
The three judges had said, however, that the NCUA had not sufficiently justified why credit unions should be able to serve core-based statistical areas without serving their urban cores. The agency has made changes to try to comply with that ruling.
“Once an agency is freed from the necessity of adhering to the reasonable range of meaning of the terms actually adopted by Congress and signed into law by the President, it effectively ceases to execute the laws and instead exercises a Humpty-Dumpty-like authority to make law,” the ABA said.
The NCUA has defined “local community” in a way that would allow an area of up to 2.5 million people to fall into a credit union’s Field of Membership, the ABA said. And the agency has defined “rural district” to include areas with an overwhelming urban population.
Five entire states each qualify as rural district, the ABA said.
As might be expected, credit union groups said they were disappointed with the ABA’s decision to appeal the lower court ruling.
“It is unfortunate to see the bankers devote so many resources to restricting the financial options of American consumers,” said CUNA President/CEO Jim Nussle.
“Banks’ continued opposition to modernizing credit unions’ Field of Membership rules is an indication of their hostility toward credit union growth and competition,” said Dan Berger, NAFCU President/CEO.
“As a credit union system, we remain undeterred by the bankers’ relentless legal maneuvers,” said CUNA Mutual Group President/CEO Robert N. Trunzo.