Last December, NCUA issued a proposed rule that would require all federally insured, home-based credit unions to move into offices in commercial locations within two years, and immediately require any contacts (including examinations) with NCUA staff to be held in public places. At press time, the agency had not finalized the rule.
NCUA cites the safety risks of examiners entering private residences as one of the reasons for issuing the proposal. The agency also characterized home-based credit unions as unfavorable settings for conducting business. It cited organizational impediments such as un-secure record-keeping; shortcomings in phone, Internet service, and other technological advancements; and the succession risk posed by the possible loss of the credit union manager.
The agency hasn’t sufficiently demonstrated risk to examiners, however, and paints home-based credit unions with too broad a brush, CUNA says in its comment letter on the proposal.
“While CUNA does strongly support appropriate member and examiner access as well as safety and soundness for credit unions of all asset sizes, CUNA disagrees with the agency’s assumption that problems among home-based credit unions are characteristic of all members of that group,” writes Mary Dunn, CUNA’s deputy general counsel. “We also disagree that problems among home-based credit unions are so threatening to the National Credit Union Share Insurance Fund that they can only be satisfactorily handled through the issuance of a new rule.
“Small, home-based credit unions feel that the proposal, particularly the requirement that all federal credit unions maintain an office that is not within a personal residence beginning two years after the rule is implemented, is unjustified and punitive,” Dunn adds. Issues with home-based credit unions would better be addressed on an individual basis, not through a broad rule, the CUNA letter said.
If NCUA approves the proposed rule, CUNA suggests some changes, such as:
For the latest developments on NCUA’s proposed rule, visit cuna.org and creditunionmagazine.com.