WASHINGTON-The week of the congressional hearing on the credit union tax-exemption-and less than a year after NCUA did not appeal a Utah court's harsh remand of a field of membership approval in the state-the American Bankers Association filed two new court cases against the credit union regulator. One will again focus on America First Federal Credit Union. After the NCUA was handed back the six-county FOM decisions for America First and three others subsequently approved for the same area, America First used the adoption of underserved areas to regain much of its FOM. In its filing, the ABA claims that the applicable law does not allow community chartered credit unions to adopt underserved areas, only multiple common bond credit unions. According to NCUA, the credit union followed NCUA's regulations, which are within the bounds of the law. Former NCUA Chairman Dennis Dollar, who initiated the agency's push to adopt underserved areas, called the ABA's suit a "very creative misreading of the statute." The regulator-turned-consultant said the only reason that multiple group credit unions are cited in the statute is because the underserved areas might not be considered permissible otherwise. He pointed to the legislative history, in which Congressman Paul Kanjorski (D-Pa.) had inserted into the record in the debate over the Credit Union Membership Access Act, "By including explicit language authorizing multiple group credit unions to include underserved areas in their field of membership, we are not in any way restricting the ability of the National Credit Union Administration to allow community and single group credit unions to include underserved areas in their fields of membership." To the contrary, ABA President and CEO Ed Yingling stated, "As a matter of statutory construction, there is no authority for a community credit union to have an underserved area added to it, period. NCUA cannot add underserved areas to community credit unions." He ridiculed NCUA's accountability requirements for adopting underserved areas. NCUA has approved hundreds of community-chartered credit unions to serve underserved areas, so the court's findings could have far-reaching implications. In a separate suit in Pennsylvania, the ABA is again questioning a community charter, this time a two-year-old approval for Members 1st Federal Credit Union. The ABA raises the question of what constitutes a local, well-defined community as it did in the previous case in Utah. The court filings claim that NCUA ignored the existence of three separate cities, 90 boroughs, 140 townships and 214 local authorities that make up the area; ignored more recent studies of metropolitan statistical areas; and relied on outdated local government information. The plaintiffs are asking the court to nullify the FOM approval and enjoin NCUA from approving the community for other credit unions, as it has already done for New Cumberland Federal Credit Union and AmeriChoice Federal Credit Union. "We think there's a pattern here of NCUA ignoring the law. We intend to use the courts to force NCUA to follow the law," Yingling said. NCUA has 60 days to respond to the Nov. 1 filings, which is quickly ticking away. CUNA and NAFCU often become heavily involved in these cases, if not becoming intervenors with the full effect of being defendants, then by filing an amicus curiae brief. CUNA General Counsel Eric Richard criticized what he termed the ABA's "typically hypocritical approach." He explained, "On the one hand, they say credit unions should serve more low-income people. But in suing NCUA over the agency's actions in Utah, the ABA is actually seeking to prevent community credit unions from doing just that. This shows that their only real agenda is to squelch competition from more consumer-friendly institutions." Concerning the Members 1st case, Richard said, "Their efforts to use the courts to harass credit unions out of serving more Americans are bound to fail because the public wants these services and will find a way to get them. The banking industry should know that their efforts to argue with the marketplace always fail in the long run." The two credit unions cited in the court challenges are confident NCUA will be victorious. -


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