Removing Barriers Blog

CUNA and Trades Disagree with Part of Court's FOM Ruling
Posted March 30, 2018 by Chandler Schuette

The U.S. District Court for the District of Columbia upheld two challenged portions of the National Credit Union Administration's field of membership (FOM) rule and struck down two provisions in a lawsuit filed against the agency by the American Bankers Association (ABA). CUNA, the National Association of Federally-Insured Credit Unions (NAFCU), and CUNA Mutual Group, in a joint statement, disagreed with the court's decision and reiterated their intent to continue to work in support of the agency's authority to issue this rule.

The provisions declared to exceed the NCUA's statutory authority include those that automatically qualify a combined statistical area (CSA) with fewer than 2.5 million people to be a local community and the increase to 1 million people the population limit for rural districts.

"Our organizations are pleased the court upheld components of the NCUA's field-of-membership rule; however, we strongly disagree with the court's decision that aspects of the rule exceed the agency's legal authority," said NAFCU President/CEO Dan Berger, CUNA President/CEO Jim Nussle and CUNA Mutual Group President/CEO Robert Trunzo. "The field-of-membership rule is not only entirely consistent with the Federal Credit Union Act, but also credit unions must have the ability to grow and serve more Americans. As the parties consider their options going forward, we will continue to support the agency on this critical issue."

The judge’s opinion rejects NCUA’s interpretation of the terms “local community” for purposes of the Combined Statistical Area portion of the rule, and “rural district.” In both cases, the court concluded that NCUA’s definition exceeded the bounds of reasonableness by sweeping in areas and populations that were too large and disconnected.  

The judge granted summary judgment to NCUA, however, on the portions of the rule concerning the omission of core areas from Core-based Statistical Areas and the provision allowing credit unions to serve adjacent areas. 

NCUA finalized its rule in October 2016, which provides more flexibility in the definition of communities, facilitates consumer and small business access to credit unions and makes it easier for credit unions to serve their members. 

The American Bankers Association filed the lawsuit in December 2016. NCUA filed a motion to dismiss in March and CUNA filed a joint amicus brief supporting NCUA in June.