ALEXANDRIA, Va. – The NCUA Board did not vote on its final field of membership changes banning non-multiple common bond credit unions from adopting underserved areas because there was dissension among the board members, according to knowledgeable sources.
The one item that had been on the agenda was the final rule, which in proposed form banned non-multiple common bond credit unions from adopting underserved areas. The agency's announcement was that it had been "withdrawn pending further review." The proposed regulation also required credit unions to build branches in each underserved area.
Sources said that the board members were not comfortable with some parts of the final rule. One source in the know told Credit Union Times that the final rule did not go far enough to stop the lawsuit so then why issue it was the logic of the majority of the board members.
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NCUA Board Member Gigi Hyland would not confirm this statement, stating only "It is a complex and important issue" that requires "further consideration." Chairman JoAnn Johnson said she would let the agency's press release stand for her comment. Vice Chairman Rodney Hood's office did not return a call for comment in time for deadline. The rule was the result of a lawsuit brought by the American Bankers Association against NCUA for its approval of a number of underserved areas for America First Federal Credit Union, which has a community charter. The law is clear that multiple common bond credit unions can adopt underserved areas and while legislative history indicates Congress intended for all credit unions to be able to do this, the law does not read that way.
The lawsuit has been on hold while NCUA promulgates a final regulation. NCUA had filed a motion to dismiss as moot and the judge postponed the deadline for the ABA's response until 20 days after the agency had issued a final rule.
During the comment period on the proposal, credit unions strongly wrote in opposition to the pull back in authority. On the other hand, the bankers groups wrote that it did not go far enough, supporting retroactive application of the rule leading to the withdrawal of any underserved areas granted to all non-multiple common bond credit unions as the agency did with America First.
The proposed rule was written prospectively. About 200 credit unions would be impacted by retroactive application.
ABA had prepared a statement for the canceled board meeting, according to a spokesperson, but it did not reveal what the organization planned to do about the lawsuit. Attorneys were not available for comment prior to press time and do not generally tip their hands, the spokesperson said.
"It is regrettable that-because of lawsuits brought by the banking industry-the affected credit unions must continue to live with uncertainty about serving working families in underserved areas," CUNA President and CEO Dan Mica said in a statement responding to the cancellation. "In fact, this entire proposal was necessitated by legal action brought by bankers-shame on their hypocrisy! Out of one side of their mouths, they complain credit unions do not do enough to serve persons of modest means. Out of the other side, they spout legal challenges to stop credit unions from extending service to the people who really need it most. As for NCUA, perhaps if in the past they had opted to take more time, the movement would not be in this predicament. At any rate, it is good that the agency has opted to be careful, and present a well-reasoned final rule."
A CUNA spokesman clarified that the statement is referring to past legal actions against NCUA, not the agency's original interpretation of the underserved area authorities under the Credit Union Membership Access Act (H.R. 1151).
NCUA Director of Public and Congressional Affairs John McKechnie said the last board meeting canceled that he could find was in 1997.
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