What Now? NCUA Lays Out Post-Decision Roadmap

September 5, 2019 at 9:09 am Leave a comment

NCUA laid out the steps it plans to take in response to the recent decision by the Court of Appeals for the D.C. Circuit, largely upholding its 2016 Field of Membership amendments and making it easier for community credit unions to expand. The NCUA signaled it’s taking a wait-and-see approach before authorizing credit unions to take advantage of the regulations.

While I wish the NCUA would have done a better job of couching its cautionary tone in more positive language, (if it were my press release, I would have said something like “while we are confident that the court’s well-reasoned decision will be upheld, it is premature to act on it until the appeals process has been exhausted…”) NCUA’s caution makes sense under the circumstances. We should know in a matter of months whether or not the Supreme Court will accept the case for review. In the meantime, it makes no sense for credit unions to make plans based on what might happen.

In addition, there is still work to be done. First, the NCUA said it would begin accepting applications for rural districts, even though it will not act on them until “the appropriate time.” In the decision, the court reversed a previous ruling and held that the NCUA had the authority to permit federal credit unions to serve a rural community with up to one million persons. The previous limit was 250,000 people.

Then there is the trickiest part of the ruling that must still be addressed. Prior to 2016, credit unions were allowed to expand within Core Based Statistical Areas- generally speaking, these are regional hubs- so long as the credit union also served the rural area within the hub. The 2016 amendments eliminated the requirement that credit unions serve “the core of the core.” The court ruled that NCUA had to do a better job of explaining how it would prevent this amendment from discriminating against individuals in poor urban areas by excluding them from community expansion plans. At the same time, the court also indicated that it was confident NCUA could satisfy this requirement.

The process of addressing the court’s concern will begin shortly with the proposal of new regulations.

Entry filed under: Legal Watch, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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