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CUNA FOM changes could discourage some CUs
WASHINGTON (4/19/10)--In comments submitted to the National Credit Union Administration (NCUA) on April 15, the Credit Union National Association (CUNA) said that a number of credit unions are “asking whether or not” the NCUA’s proposed field-of-membership changes could “discourage credit unions from seeking community charters” or expanding their service areas. The recommendations in the comment letter were developed by CUNA’s FOM working group, which is headed by Truliant FCU CEO Marc Schaefer. The comment period for the field-of-membership rules ended last week. The NCUA's FOM proposal would set objective and quantifiable criteria to determine the existence of a well-defined local community for areas that encompass multiple group areas. A new, objective definition for rural districts has also been proposed. While CUNA “appreciates NCUA’s efforts to insulate the agency and credit unions from further legal challenges that result from the agency’s field of membership policies and procedures,” CUNA recommended that the NCUA provide more leeway for applications involving multiple political jurisdictions and rural districts. Specifically, CUNA urged the NCUA to “consider whether a statistical area definition for rural district is appropriate or necessary” and asked the NCUA to “reconsider” its proposed specific statistical criteria for multiple political jurisdictions to be considered a community. CUNA also strongly opposed FOM changes that would prevent credit unions from demonstrating a community is present through the use of narrative information, as this change would “impose a burden on the FOM charter process that the FCU Act does not require or intend and would result in fewer applications for community charters or expansions, including for areas that need credit union services.” CUNA is also concerned by new emergency merger definitions that would give NCUA additional latitude to require a credit union that is at or near 4% net worth to be merged, “regardless of whether there are other safety and soundness considerations or whether such a credit union that is not experiencing other supervisory issues wants to remain a separate entity.” CUNA in the letter spoke in support of the NCUA’s treatment of single political jurisdictions, saying that that treatment was “reasonable” and “consistent with NCUA’s authority under the Federal Credit Union Act. CUNA also backed the NCUA’s “grandfathering approach” that would allow future credit union applications “to be approved based on areas NCUA has already permitted.” “This should be allowed for rural and undeserved areas as well as for urban areas,” the letter drafted by CUNA Deputy General Counsel Mary Dunn added.

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