ICBA - Publications - Court Rules in Favor of Credit Unions

Court Rules in Favor of Credit Unions

NOVEMBER 16, 2001



The U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court decision that regulations adopted by the National Credit Union Administration (NCUA) governing credit union membership do not exceed congressional intent.

A suit was filed in connection with the NCUA's rules to implement portions of the Credit Union Membership Access Act (CUMAA, H.R. 1151), arguing that the rules were too permissive and inconsistent with congressional mandates. The CUMAA limits multiple-bond credit unions to groups with fewer than 3,000 members, but the NCUA rules permit immediate family members of credit union customers to join the credit union but not count against the 3,000 limit. The suit argued this was an end-run around congressionally mandated limits. The court disagreed, deciding that there is enough ambiguity in the law to warrant excluding family members from the 3,000 limit.

The suit also contended that the NCUA gives individual credit unions too much authority on critical decisions. For example, the CUMAA permits multiple common-bond credit unions with groups of more than 3,000 members under certain circumstances. The NCUA said it would take into account the "desire and intent" of a particular group in granting such exceptions. The suit argued that this in effect would give the individual group the power to decide whether or not to join another credit union or remain independent, a judgment that should rest solely with the NCUA. The Court again disagreed, noting that the rules take other factors into account as well.