District Court Dismisses Bank Trade Group's Lawsuit Regarding Credit Union Business Lending Rule

Banking State Issues NCUA Credit Union

On January 24, the U.S. District Court for the Eastern District of Virginia issued an order dismissing a suit seeking to overturn a rule that allows federally regulated credit unions to expand their business lending activities. The complaint, filed in September 2016, claimed the NCUA  exceeded the plain language of its statutory authority by permitting such business lending activities  The bank trade group further alleged that because credit unions are tax-exempt, they offer commercial loans at a lower price than the trade group’s community bank members, resulting in injury to those institutions. The court, however, stated that the bank trade group failed to prove its claim or show that injury was caused to its members. “Merely codifying an extant rule in part of a new regulation does not effectuate a reopening. If anything, this reflects the agency’s view that its earlier rule is ... settled to the point that it may serve as a foundation for further rule-making,” Judge Cacheris wrote.