ALEXANDRIA, Va. (11/19/15, UPDATED 11:42 a.m. ET)--The National Credit Union Administration (NCUA) just voted to put out for comment its proposal to modernize credit union field-of-membership rules.
CUNA has launched a full analysis of the proposal and shares early highlights. As recommended by CUNA, the plan would:
• Allow for a major improvement in the definition of "rural district." It would allow rural district to be comprised of up to 1 million residents by changing the standard used to measure it. That is four times greater than the current cap of 250,000;
• Allow a congressional district to be considered a Well-Defined Local Community (WDLC) to support a community charter application;
• Eliminate a geographic limitation on trade, industry, or profession (TIP) charter for federal credit unions with associational common bond memberships; and
• Streamline the paperwork and process to allow credit unions to add groups with up to 5,000 potential members to be added to a multiple common bond federal credit union. The current rule limits these groups to 3,000 potential members.
Under the proposal, the following would also be allowed:
• A federal credit union (FCU) could convert to a community charter or expand an existing community charter without having to serve the core area if electing to serve a portion of a Core Based Statistical Area. The NCUA will continue to review the credit union’s ability to serve the requested area;
• An FCU would be able to serve a Combined Statistical Area as designated by the Office of Management and Budget. This is an improvement over the current limitation of a Metropolitan Statistical Area subject to a population cap of 2.5 million
• An FCU can apply to serve an outside area contiguous to its existing Core Based Statistical Area or single political jurisdiction using a written narrative to demonstrate interaction or common interests;
• When a credit union seeks to serve an underserved area, the NCUA would not recalculate the concentration of facilities ratio analysis, excluding any non-depository institutions or non-community credit unions or both from the concentration of facilities ratio. However a second analysis will still include other multiple common bond credit unions in the area;
• The NCUA would also consider alternative methods to determine whether a proposed area is underserved by other financial institutions (provided data relies on NCUA data or other banking regulator). A credit union could use Consumer Financial Protection Bureau data, which uses Home Mortgage Disclosure Act data to calculate underserved;
• The definition of a TIP (trade, industry, professional) charter expanded to include employees of entities that have a strong dependency relationship with employees who work directly with employees of other entities within the same industry.
Read News Now Friday for more complete details on the FOM plan and all open meeting actions.