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ABA sues NCUA over field of membership rule

Last week, the American Bankers Association filed a lawsuit in an effort to overturn the National Credit Union Administration's final rule that more broadly expands the existing fields of membership requirements. For example, under the final rule, federal credit unions can apply to serve entire geographic regions, so-called “rural districts” of up to 1 million people. That could include the entire MSA of Oklahoma City, or entire states: Alaska, North Dakota, South Dakota, Vermont and Wyoming, for example.

You'll remember the original purposes of giving credit unions a federal income tax exemption was to entice them to serve a limited group of low- to moderate-income consumers. Not anymore. Under these new rules, federal credit unions will now be able to attract potential customers from a much larger pool of potential customers.

This is the second lawsuit that's been filed challenging two of the NCUA's expanded rules. The first one was filed by the ICBA challenging the NCUA's business lending rules. The two lawsuits are expected to proceed on fairly parallel courses.

Over the years, the NCUA has issued several rules both proposed and final, in recent years greatly expanding the authority of credit unions without going to Congress for statutory authority.  

You can read the ABA's complaint here by clicking here.

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