Magazine article American Banker

Banker Suit to Slow Credit Union Expansion May Be Doing Opposite

Magazine article American Banker

Banker Suit to Slow Credit Union Expansion May Be Doing Opposite

Article excerpt

Byline: John Reosti

Bankers who had hoped a lawsuit challenging revised field-of-membership rules would force a pause in credit union expansion may be disappointed.

The American Bankers Association filed a lawsuit in December in U.S. District Court for the District of Columbia in hopes of blocking policies it believes remove most restrictions on credit union membership.

For now, the litigation seems to have had little, if any, impact on credit union applications to expand fields of membership, industry experts said. While reasonably confident that there has been no decline in applications, some consultants said they have received more calls from credit unions keen on expanding before the litigation is resolved.

"I wouldn't say it's had a chilling effect because credit unions have become used to banker litigation," said John McKechnie, a senior partner at Total Spectrum, a Washington credit union consulting firm. "There's been so much lately, it's become part of the background noise. ... They seem to have decided, at least anecdotally, to push forward."

A National Credit Union Administration spokesman noted that the new field-of-membership rule has been in effect for barely two months, so the agency has yet to draw any conclusions about the number applications it has received.

The ABA filed its lawsuit two months after the Independent Community Bankers of America sued the NCUA over changes it made to member business lending regulations. That lawsuit fizzled after a federal judge affirmed the revised regulation and the ICBA opted against filing an appeal.

An ABA spokesman said the field-of-membership lawsuit is likely months away from a decision. Lawyers representing the NCUA filed a response last month, and now the sides have several months to submit competing motions for summary judgment. …

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