WASHINGTON (12/16/15)--Field of membership (FOM) and examination issues were explored by National Credit Union Administration board members in this month’s NCUA Report.

Chair Debbie Matz and Vice Chair Rick Metsger addressed FOM changes in relation to the NCUA’s “Year of Regulatory Relief,” while board member J. Mark McWatters called for a better examination appeals process.

Matz cited the increase in federal credit unions converting to state charters as a way to expand their fields of membership as the reasoning behind the agency’s FOM proposal.

“It seems that currently the greatest threat to the dual-chartering system is the disparity in fields of membership between federal charters and many state charters,” Matz wrote. “As viable fields of membership are critical to the future of federal credit unions, federal charters need a rule that’s more permissive than any rule NCUA has approved in the past, yet stays within the agency’s statutory authority.”

Matz added that the agency’s over-arching vision is to enable federal credit unions to reach potential members “from all walks of life,” and that whether a consumer is in a rural area or the inner city, they should be able to turn toward credit unions instead of predatory lenders.

She also urged credit union stakeholders to submit comments, particularly on ways the NCUA could further streamline the FOM application and approval process.

Metsger used his column to reiterate why FOM reform is his top priority, since it affects almost all credit unions, facilitates growth that small and medium-sized credit unions need and is regulatory relief that gives boards and management more flexibility to define their mission and market.

“There is no one ‘silver bullet’ in the proposed rule that solves everyone’s strategic issue,” Metsger wrote. “Instead, there will be a menu of options, each of which will solve some credit unions’ strategic issues, and which, as a group, will provide everyone with enhanced membership tools.”

Metsger added that the proposal recognizes that there are many paths to success, and “each credit unions can choose the path that best meets the needs of its members and the occupational groups, associations and well-defined local communities, neighborhoods and rural districts it serves.”

In his column, McWatters cited credit unions leaders who expressed concerns to him that they are “increasingly anxious as examiners receive even more discretion” while a credit union’s ability to appeal is as “futile, ineffectual, costly and fraught with risk as ever.”

McWatters cited the CUNA-supported (and NCUA-opposed) Financial Institutions Examination Fairness and Reform Act (S. 774/H.R. 1941) as a legislative solution for examination fairness, since it would establish an independent appeals process.

McWatters also recommended the NCUA seek general comments from credit unions and other stakeholders through an Advance Notice of Proposed Rulemaking, then use those comments to develop a proposal on exam appeals.

According to McWatters, a final rule on exam fairness should address:

• The rights of a credit union in challenging examiner findings and directives;
   
• The right of all credit unions to representation by counsel in all appeals processes;
   
• The right of all credit unions to receive a timely determination of all appeals proceedings;
   
• A requirement that the examiner must provide a list to the credit union of all the authorities relied upon to support directives; and
   
• A requirement that NCUA staff provide regular reports to the board in a public meeting on the use of the appeals process.