WASHINGTON (4/13/10)—April 15 is the comment deadline for the National Credit Union Administration’s (NCUA) proposed changes to field-of-membership (FOM) rules, and the Credit Union National Association (CUNA) encourages federal credit unions to submit remarks. CUNA supports the objective of the FOM proposal, which is to revise the current FOM process in such a way that it limits--or perhaps completely cuts off--future banker challenges to NCUA's FOM policies and processes. “There is no higher priority in dealing with FOM applications than for the agency to build a solid record that demonstrates its decisions are made on a rational, not arbitrary, basis,” said CUNA Deputy General Counsel Mary Dunn Monday. However, she added, CUNA has identified a number of concerns regarding the agency’s plan and will raise a range of issues and recommendations in its comment letter to improve the proposal before it becomes a final rule. Those concerns, generally, fall under the headings of:
* Well-defined local communities: Placing greater reliance on quantifiable data as opposed to subjective information and review would help limit litigation; * Single political jurisdictional areas: Retaining current treatment of single jurisdictions so that any county, city or smaller political jurisdiction, regardless of size, is considered by NCUA to be a well-defined local community for purposes of chartering new community credit unions or adding areas to an existing charter; * Multiple political jurisdictional areas: To avoid unnecessary exclusions, the NCUA should only require credit unions to meet any two of the agency’s proposed four criteria; * Rural districts: The criteria NCUA has chosen to define a “rural community” are too limiting and do not sufficiently take into account areas where the population is spread out over large areas; * Underserved areas: In CUNA’s view, underserved areas should not have to qualify as well-defined local communities, as that approach is not required by the Federal Credit Union Act; * Marketing plans: CUNA rejects a provision that would require NCUA’s review of marketing plans and business plans after an area has been approved. That review, CUNA maintains, should only occur for purposes of safety and soundness; and * Emergency merger definitions: CUNA is concerned that the new provisions would give the NCUA additional latitude to require a credit union that is at or near 4% net worth to be merged, regardless of whether the credit union wants to remain a separate entity.
Use the resource links below for additional information.