The NCUA already is using its new—and illegal– Field of Membership rules to greatly expand thereach of specific credit unions, the American Bankers Associationsaid Tuesday, in its lawsuit against the agency.

The ABA contends that the NCUA has approved expansions that “arenot limited to a single 'well-defined local community,neighborhood, or rural district,' as required by the Federal CreditUnion Act,” the ABA said.

In October, the NCUA board approved rules that board memberssaid would provide credit unions with more flexibility to determinetheir fields of membership. Then-board Chairman Rick Metsger saidthe rules would make it easier for people to gain access toaffordable financial services.

The ABA filed suit, saying that the NCUA was acting as a creditunion “cheerleader” and was allowing credit unions to expand theirfields of membership beyond those allowed by federal law.

Both sides have asked Judge Ketanji Brown Jackson of the U.S.District Court for the District of Columbia to issue a summaryjudgement in their favor. Those motions are still pending.

An NCUA spokesman said that the agency is reviewing the ABAfiling, but would have no additional comment.

In its motion, the ABA cites several examples of NCUA decisionsthat the association says violates federal law:

• The agency decided that the Utah Community Credit Union mayserve the entire Salt Lake City-Provo-Orem combined statisticalarea, which includes 2.4 million people. That area exceeds “anyreasonable definition of a 'well-defined local community,” the ABAsaid.
• The NCUA approved a field of membership expansion for PotlatchNo. 1 Federal Credit Union so that the credit union may serve anarea of 999.994 people—almost exactly at the one-million-personlimit for community credit unions serving a rural district. Thecredit union field of membership now includes parts of Oregon,Idaho and Montana.
• The Visions Federal Credit Union was approved to serve 958,350people. The ABA contends that the urban areas of Binghamton,Ithaca, and Elmira account for more than half of the population forthis rural district.
• Pioneer West Virginia Federal Credit Union was approved toserve more than 983,000 people covering an “oddly-shaped” portionof West Virginia and portions of Kentucky and Ohio. The WestVirginia area includes a “donut hole” in the middle, the ABAargued.
• North County Federal Credit Union was approved to serve a fieldof membership of 632,373 people, covering roughly the northern halfof Vermont and New Hampshire and an adjacent area of New York. The“rural district” includes eight of Vermont's nine cities, the ABAsaid.