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

The ABA contends that the NCUA has approved expansions that “are not limited to a single 'well-defined local community, neighborhood, or rural district,' as required by the Federal Credit Union Act,” the ABA said.

In October, the NCUA board approved rules that board members said would provide credit unions with more flexibility to determine their fields of membership. Then-board Chairman Rick Metsger said the rules would make it easier for people to gain access to affordable financial services.

The ABA filed suit, saying that the NCUA was acting as a credit union “cheerleader” and was allowing credit unions to expand their fields 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 summary judgement in their favor. Those motions are still pending.

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

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

• The agency decided that the Utah Community Credit Union may serve the entire Salt Lake City-Provo-Orem combined statistical area, which includes 2.4 million people. That area exceeds “any reasonable definition of a 'well-defined local community,” the ABA said.
• The NCUA approved a field of membership expansion for Potlatch No. 1 Federal Credit Union so that the credit union may serve an area of 999.994 people—almost exactly at the one-million-person limit for community credit unions serving a rural district. The credit union field of membership now includes parts of Oregon, Idaho and Montana.
• The Visions Federal Credit Union was approved to serve 958,350 people. The ABA contends that the urban areas of Binghamton, Ithaca, and Elmira account for more than half of the population for this rural district.
• Pioneer West Virginia Federal Credit Union was approved to serve more than 983,000 people covering an “oddly-shaped” portion of West Virginia and portions of Kentucky and Ohio. The West Virginia area includes a “donut hole” in the middle, the ABA argued.
• North County Federal Credit Union was approved to serve a field of membership of 632,373 people, covering roughly the northern half of Vermont and New Hampshire and an adjacent area of New York. The “rural district” includes eight of Vermont's nine cities, the ABA said.