Academic journal article ABA Banking Journal

NCUA's Membership Stretch May Land It Back in Court

Academic journal article ABA Banking Journal

NCUA's Membership Stretch May Land It Back in Court

Article excerpt

It doesn't have the box-office ring of Rocky V, Godfather III, or Terminator II. Judgment Day, but how does Banks v. National Credit Union Administration II grab you? If that doesn't pique your interest, how about CU II: Raid on the Rogue Regulator?

You won't see either new title in your local theater or video store, but it could be coming to federal court soon. That's where the matter began back in late 1991 when ABA and a handful of community banks challenged NCUA's approval of expanded field of membership for AT&T Family Federal Credit Union. The case, known now as First National Bank & Trust Co. v. National Credit Union Administration, took a tortuous route to the U.S. Supreme Court-during which rime a federal judge branded NCUA a "rogue regulator" for ignoring the law. The High Court gave banking a short-lived victory, undone by Congress with H.R. 1151, the Credit Union Membership Access Act.

It is the next episode of this long-running saga that puts NCUA in new jeopardy. In the fall of 1998 the agency published its controversial proposed interpretation of what Congress had authorized in H.R. 1151. So far off the mark did one of the bill's architects, Rep. John LaFalce (D.-N.Y.), find it that he wrote a long letter explaining how the agency bad gone wrong. Banks, in their filed comments, made other criticisms.

However, it's typical, when regulatory agencies publish something for comment, for them to consider all the letters submitted, consult among experts, and then come up with something reflecting all the input. This can often take months-sometimes, years.

This time around, it took just a bit over four weeks. NCUA stopped raking comments in mid-November and on Dec. 17 approved at a public meeting of its board a final version of its field of membership and chartering rules that bore a strong resemblance to the much criticized first round. This took some observers by surprise, and disgusted others who felt the process had been given short shrift in the interests of putting aggressive credit unions back in the game.

In a prepared statement, ABA said that: "The rule NCUA adopted snubs congressional intent by failing to implement statutory limitations that encourage the formation of separate credit unions and ensure that community credit unions are local. …

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