Contending that the new NCUA Field of Membership rules allowfederal credit unions to expand beyond the bounds that Congressprescribed, the American Bankers Association on Wednesday asked afederal court to nullify the regulations.

In the suit, filed in the U.S. District Court for the Districtof Columbia, the ABA said that the final rule expands “the universeof members eligible to join a single federally-chartered creditunion well beyond the limits established by Congress.”

The ABA states that because credit unions are tax exempt,restrictions on their size are essential to prevent them fromgaining an unfair competitive advantage over tax-paying financialinstitutions

“By exceeding these statutory limitations, the Final Rule upsetsthe balance Congress struck between granting federal credit unionstax-favored status and limiting their operations to carefullycircumscribed groups or localities that share a common bond,” theABA contends

For instance, the association said, community credit unions willbe allowed to operate even though their field of membership is notlimited to a single well-defined local community, neighborhood orrural district.

The ABA said that in the past, federal courts have invalidatedthe NCUA's attempts to expand credit union fields ofmembership.

Many of the provisions of the final rule, as adopted by the NCUAin October, were part of the proposed rule issued last year.However, the NCUA did not include a proposal defining acongressional district as a well-defined local community in thefinal rule. The NCUA received 11,380 comments on the proposedrules, with commenters generally supporting them by a ratio ofabout three to one.

The goal, according to NCUA Board Chairman Rick Metsger, is tomake it easier for people to gain access to affordable financialservices.

The NCUA also has issued proposed rules to make additionalchanges to field of membership regulations. The comment period forthose rules closes Friday.

The ABA asked the federal court to set aside the rules.

The NCUA also is fighting a suit filed by the Independent Community Bankers of Americachallenging the recently revised Member Business Lending rules.