NCUA's Metsger Criticizes Judge's Decision Invalidating Portions of Its FOM Rule

In an April 5 speech before the Minnesota Credit Union Network, National Credit Union Administration (NCUA) Board member Metsger delivered critical remarks regarding a recent decision by a federal judge invalidating portion of NCUA's new field of membership (FOM) rule.

The American Bankers Association sued NCUA over four provisions in the agency's FOM rule. The federal judge invalidated two of the provisions, while upholding two other provisions.

The federal judge overturned the agency's provision allowing rural district charters to serve rural areas with populations of up to one million people, up from the old limit of 250,000. The judge also overturned the provision that defined a Combined Statistical Area with a population up to 2.5 million people as a de facto local well-defined community.

However, Metsger did not mince his words expressing his disapproval of the judge's decision. He stated that judge's decision was only "half right."

Metsger argued that the two overturned provisions of the FOM rule were neither arbitrary nor capricious.

Metsger was also critical of the judge's ruling because it failed to give deference to the agency in interpreting the Federal Credit Union Act.

He further commented that the agency adhered to the law, because no member of Congress objected to the rule or even introduced a resolution to veto the rule.

In addition with respect to the rural district definition, Metsger argued that banks are abandoning rural America and the expansion of the rural district definition was "designed to solve very real financial access problems for residents of rural America."

Metsger's harshest comments were directed at the American Bankers Association and the banking industry. He referred to the banking industry as protectionist, seeking to deny consumers access to not-for-profit credit unions.

NCUA has 60-days to decide whether it will appeal the judge's decision.

Below is the speech.