Saturday, May 27, 2017

ABA Files Motion for Summary Judgment in FOM Lawsuit

The American Bankers Association on Friday, May 26 filed a motion for summary judgment in its case challenging the National Credit Union Administration’s final rule expanding community-based credit union fields of membership (FOM) far beyond the limitations imposed by Congress.

The rule allows community credit unions — which Congress by statute limited to serving a single “well-defined local community, neighborhood, or rural district” to serve large regions encompassing multiple metropolitan areas with populations in the millions.

ABA specifically challenged the inclusion of Combined Statistical Areas — which encompass multiple Metropolitan Statistical Areas — as “local communities”; the ability of credit unions to serve Core-Based Statistical Areas without serving the urban core that defines the area; the ability to add “adjacent areas” to existing community fields of membership; and the dramatic expansion of what constitutes a rural district.

In its motion, ABA argued that this expansion of taxpayer-subsidized financial institutions is inconsistent with the limited scope of credit union operations envisioned by Congress, that it authorizes fields of membership that federal courts have previously rejected and that it undermines the ability of taxpaying banks to serve their communities.

ABA is seeking a declaration that the rule exceeded the agency’s statutory authority and is arbitrary and capricious, as well as an injunction prohibiting any community charter expansions pursuant to the challenged portions of the rule.

Read the motion for summary judgment.

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