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Washington
No support for NCUA underserved plan says CUNA
WASHINGTON (8/19/08)—The Credit Union National Association (CUNA) does not support a National Credit Union Administration (NCUA) proposal that would dramatically alter the current federal regulatory process for approving multiple group credit unions' applications to serve underserved areas. In fact, in an Aug. 18 comment letter CUNA questioned the very basis of the NCUA plan. “Before addressing concerns with various aspects of the proposal, CUNA has a fundamental disagreement with the basic rationale for the proposal and the analysis of the Federal Credit Union Act’s provisions regarding underserved areas that underlie the proposal,” wrote CUNA Deputy General Counsel Mary Dunn. “While we appreciate efforts to clarify and update rules, we are not aware of problems with the current process that indicate that the (field of membership) FOM Manual provisions on underserved applications are not clear and which would justify a broad new regulation on underserved areas and the application process,” the CUNA letter said. CUNA noted that under FCU Act, a federal credit union must have a field of membership that is a single common bond, multiple common bond, or which encompasses a community FOM. The Act provides an exception for underserved areas. “As these provisions indicate, and as NCUA’s current FOM provisions recognize, Congress envisioned a process for approving undeserved areas that first starts with a determination that a recognizable geographic area--a local community, neighborhood or rural district (i.e., community)--exists,” CUNA pointed out. The letter added that the legislative history to the Credit Union Membership Access Act reinforces that vision but added that the proposal would erroneously rely on geographical, rather than economic, criteria from the Community Development Financial Institutions Fund's regulations. "In our view, Congress intended that NCUA would implement the provisions of the Act carefully but in a manner that would facilitate service to undeserved eras. The proposal undermines both these objectives," Dunn said. CUNA urged the NCUA to retain the current process , not to proceed with the proposal and said the agency should “be mindful” that the Credit Union, Bank, and Thrift Regulatory Relief Act, HR 6312, remains pending in Congress, That legislation would change the definition of “undeserved area.” Meanwhile, the American Bankers Association has written to NCUA supporting limitations on undeserved areas, such as limiting underserved designations to census tracts. The ABA also recommends that if a branch of any financial institution is located in a proposed area, "this would indicate with high probability that the area is not undeserved." To read CUNA’s complete comment letter, use the resource link below.


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