The key implication of the Supreme Court’s field of membership decision
Credit unions will now be able help more people if they can effectively reach out to and serve larger markets.
The U.S. Supreme Court’s decision not to hear American Bankers Association v. National Credit Union Administration is a huge win for credit unions. It not only means that credit unions will be able to help more Americans through expanded fields of membership, but also could embolden the National Credit Union Administration to take steps to advance credit unions that they might have otherwise shied from.
Instead of formal rules that prevent credit union expansion, credit unions will now face a different obstacle: demonstrating their ability and intent to serve larger markets.
Despite Jim Nussle’s recent argument, NCUA is not going to eliminate or effectively eliminate field of membership anytime soon. Rightly or wrongly, doing so could jeopardize credit unions’ tax-exempt status—an unnecessary risk. Instead, NCUA’s new field of membership rule offers something better. It provides room for long-term continued growth and bolsters credit unions’ tax-exempt status by stipulating that the largest fields of membership require a greater commitment to a mission of meeting the credit and savings needs of persons of modest means.
The Supreme Court’s decision not to hear the case leaves the vast majority of NCUA’s 2016 field of membership modernization rule, which the ABA challenged before it was even implemented in early 2017, intact. The case was first decided largely in ABA’s favor by Judge Dabney L. Friedrich of the U.S. District Court for the District of Columbia. Friedrich found that two key provisions contained in the rule exceeded the regulator’s statutory authority:
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