SALT LAKE CITY – The American Bankers Association announced last week that it agreed to dismiss its lawsuit pending in Utah, challenging the authority of non-multiple common bond credit unions to adopt underserved areas, but, according to NCUA the case is not technically dismissed yet.

At the June NCUA Board meeting, the agency approved a final rule stating that only multiple common bond credit unions could adopt underserved areas as the literal language of the Credit Union Membership Access Act (H.R. 1151) states. America First Federal Credit Union out of Ogden, Utah had already been stripped of its underserved areas. However, credit unions have argued that legislative history supports a different view.

While the ABA did not get the retroactive application it was seeking in the regulation, the banking trade said that NCUA had “corrected its actions.” The case was dismissed without prejudice, which means the ABA could bring it up again “should circumstances warrant.”

“We've accomplished what we set out to do with this lawsuit,” ABA President and CEO Ed Yingling commented. “As a result of our litigation, NCUA withdrew its approval and revamped its rule to bring it into compliance with the law.”

He added, “That doesn't translate to `case closed,' however. We'll continue to closely monitor NCUA's and the credit union industry's compliance with the newly revised underserved rules.” Yingling still questioned accountability in adopting underserved areas.

NCUA Director of Public and Congressional Affairs John McKechnie said the suit has not technically been dropped so he could not comment.

“The losers in this issue are the people who live in low-income areas and will be deprived of credit union service-which the bankers admit is what they `set out to do with this lawsuit.' In their zeal to curtail credit unions, bankers have also shut the door to modest means people who are not receiving financial services, and the ability of credit unions to willingly serve them,” CUNA President and CEO Dan Mica said. “Clearly, that door must be opened again-maybe with a shove.”

NAFCU Senior Counsel Carrie Hunt was pleased with the ABA's decision. “We would hope, also, that they have come to recognize the hypocrisy in challenging an institution's service to underserved persons on the one hand, and complaining not enough attention is being paid to the underserved on the other.” NAFCU vowed to work the issue on Capitol Hill.