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Concept
National Credit Union Administration v. First National Bank & Trust Co.
Summary
National Credit Union Administration v. First National Bank & Trust Co., 522 U.S. 479 (1998), is a 1998 legal case in which the Supreme Court of the United States ruled that banks had prudential standing to challenge regulations that permitted credit unions to enroll unaffiliated members.
The case involves the Federal Credit Union Act, which limits federal credit union membership to “groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community or rural district.” There are three permitted types of common bonds: occupational, associational, and community. Until 1982, federal credit unions formed along occupational lines consisted of the employees of one employer. In 1982, NCUA announced a multiple group occupational credit union policy that resulted in large, interstate, credit unions that offer banks competition for consumer products and services.
Because of their mutual form of ownership, credit unions are not subject to corporate taxes. Banks argue that since credit unions do not pay taxes, they may offer consumer banking products at prices lower than banks and thrifts. Credit unions do not come under the requirements of the Community Reinvestment Act, 12 U.S.C. §§ 2901 -2906, as they solely lend to their membership.
The Court affirmed First National Bank and Trust Company v. National Credit Union Administration which had remanded the case to the district court. This meant that, without legislation changing the language of the statute, a broad order could have been issued enjoining the admission of members to any federal occupational credit union who did not share the original single common bond of occupation. All parties to the suit, however, asked the court to delay acting while Congress considered legislation. Without legislation, it was feared that many of the large credit unions already in existence would face the likelihood that their stream of new members would slow to a trickle and, thus, their long term viability prospects diminish.
P.L.
Official source
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