Bank trade associations called the NCUA's proposed field of membership rule a quasi-legislativeaction being pursued by unelected bureaucrats in a letter toCongress Wednesday.

The AmericanBankers Association and Independent Community Bankers ofAmerica joined forces in the letter, which quoted NCUA ViceChairman Rick Metsger saying the agency was acting on FOM reformbecause Congress is deadlocked on the issue.

“(The) NCUA is stealing the province of the legislature, in fullview and without apology,” the letter read.

The bankers further charged that the proposed rule woulddramatically expand federal tax subsidies, diminish governmentrevenues that support needed services and harm taxpaying communitybanks.

Credit union trade associations quickly fired back.

NAFCU President/CEO Dan Berger wrote in a letter to Senate andHouse leaders that the NCUA's effort to streamline its charteringand FOM procedures is well within its statutory authority, and isalso able to remove non-statutory constraints on FOM chartering andexpansion.

The bankers' charged that the NCUA's proposal ignored two keyphrases, well-defined and local, required by congressional statute.Specifically, the ABA and ICBA opposed the NCUA's use of the Officeof Management and Budget's combined statistical area to qualify asa local community when allowing credit unions with communitycharters to expand.

“A region is not a local community,” the bankers' letter read.“For example, the Boise City-Mountain Home-Ontario, ID-OR combinedstatistical area would qualify as a well-defined local communityunder (the) NCUA's proposal. This combined statistical areacrossing state borders encompasses eight counties with a land areaof 23,135 square miles, which is larger than the land area of 10states. To call this local is facially absurd.”

The trades also opposed the NCUA's proposal toallow congressional districts to count as a community. Doing sowould allow credit unions to expand statewide in the seven statesthat only have one member of Congress.

“In rural America, congressional districts tend to cover largegeographic areas (including many independent communities thatactually are local and well-defined in and of themselves) creatinghighly tenuous bonds between potential members in the context oftargeting federal tax benefits under federal statute,” the letterread.

Berger responded, writing, “While (the) NCUA's proposalrecognizes new ways that credit unions can evidence why aparticular area is well defined and local in applying for charterchanges, it must be noted that these new avenues track otherfederal government recognition (such as U.S. Census or OMB) ofthese areas. Accordingly, (the) NCUA is merely recognizing areasthat are already codified elsewhere in the federal government.”

CUNA Deputy Chief Advocacy Officer Elizabeth Eurgubian alsoresponded to the letter, supporting the NCUA's proposal and sayingit provides consumers with better access to financial services.

“The NCUA's rulemaking would merely allow more flexibility forfederal credit unions to better serve the consumers in theircommunities,” she said. “Consumer access to financial servicesshould be the goal of all financial servicesinstitutions. (The) NCUA falls well within its statutoryauthority for the proposed rule. The board's interpretation ofthe Federal Credit Union Act is reasonable and supported bythe record. The allegations of the NCUA overstepping itsbounds are simply unfounded. In fact, CUNA suggests thechanges are quite modest and in fact could and could go muchfurther.”

Berger also pressed the point of consumer access to financialservices.

“It is remarkable (but not surprising) that the trades thatrepresent the same industry that was caught redlining, engaged inrisky lending that led to the financial crisis and has come tosymbolize corporate greed on the campaign trail would attackefforts to make it easier for Americans to have access to low-cost,consumer friendly financial services provided by credit unions,” hewrote.

Comments on the field of membership rule, proposed on Nov. 19,are due to the NCUA by Feb. 8.