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The United States Supreme Court declined on Monday to review a lawsuit by the American Bankers Association against the National Credit Union Administration, upholding a 2016 rule change affecting field of membership.
The lawsuit involved a 2016 NCUA rule allowing credit unions to expand their field of membership, which determines who is eligible to join the institution, using new definitions of “local community” and “rural district.”
A federal court judge had struck down key provisions of the rule in 2018, but an appeals court upheld most of the rule last August, including provisions to expand field of membership to a local community made up of a combined statistical area of up to 2.5 million people or a rural district with up to one million people.
The American Bankers Association’s had petitioned the Supreme Court in March to review the appeals court’s ruling, including the NCUA’s definitions of “local community” and “rural districts.” The ABA said in a statement in March that the legal precedence that gives an agency the authority to interpret statutes did not “authorize an agency to interpret a term in ways that exceed its ordinary range of permissible meanings.”
NCUA Chairman Rodney Hood said in a statement that the Supreme Court’s decision not to hear the petition would “help the NCUA in its efforts to foster greater financial inclusion for all Americans.”
The Cooperative Credit Union Association, the trade group for credit unions in Massachusetts and several other states, said it supported the NCUA rule.
“The Supreme Court’s decision is a major victory for credit unions and will ensure consumers continue to have freedom of choice for their financial futures,” Ron McLean, CCUA president and CEO, said in a statement. “Access to credit unions and their financial services will help to ensure financial equality for consumers everywhere.”
The banking industry has long argued that credit unions, which are tax-exempt institutions, are supposed to be built around a common bond that is eroded when fields of membership expand.
