Bankers’ latest action brings both sides to appeals court for review of ruling on agency’s credit union membership regs

A federal court’s March ruling on credit union membership rules that essentially gave both sides in the case something to call both a win and a loss has now been appealed by the two parties in the case, the federal regulator of credit unions and one of the leading bank trade associations.

Tuesday, the American Bankers Association filed its “notice of cross appeal” with the U.S. Court of Appeals for the District of Columbia, asking the panel to review a March 29 decision by the lower court, in particular that section of the ruling that upheld a portion of the National Credit Union Administration’s (NCUA) “field of membership” rules. That portion of the agency’s final rule permitted a credit union to serve a portion of a “Core-Based Statistical Area” that does not include the “core area.”

The move by the bankers’ association comes after NCUA’s own May 23 decision to appeal portions of the ruling.

Although the district court on March 29 upheld portions of the NCUA rule, it also vacated other portions of the regulation, which the agency had adopted in 2016, and which took effect last year. Specifically, the court threw out a provision that qualifies a “combined statistical area” with fewer than 2.5 million people as a “local community” that can be served by a credit union; and one raising to 1 million people the population limit for rural districts that may be served.

Last month, the agency said in a notice, it told the court that the agency will not grant any new community charters under the vacated rule provisions while the order is in effect. It said it also instructed affected credit unions during this time not to accept any new members who would only be eligible for membership under those provisions.

However, the agency said it will not require credit unions to de-list members who became members on or before April 4, 2018.

The NCUA appeal asks the panel to review the district court’s decision on the two vacated portions of its regulation.

ABA notice of cross appeal (filed June 5)

NCUA notice of appeal (filed May 23)