ALEXANDRIA, Va. (11/20/15)--CUNA President/CEO Jim Nussle said Thursday that the field-of-membership (FOM) rule changes proposed by the National Credit Union Administration (NCUA) at its open board meeting will provide greater choice for consumers, as well as flexibility for credit unions to better serve their communities.
Nussle noted that the proposal incorporated many changes suggested by CUNA and its members. The changes, he said, will support a dual chartering system and better align federally chartered credit unions with state-chartered credit unions "who have seen sensible changes by their legislatures in recent years as a result of the demands from the communities they represent."
"We thank the NCUA for listening to CUNA and drafting a rule that stays within the confines of the Federal Credit Union Act, all while ensuring American consumers are allowed more options when choosing their financial services provider.”
The NCUA voted 3-0 to put the proposal out for a 60-day comment period, which will start when the plan is published in the Federal Register.
Immediately after the vote, CUNA sent a letter to all members of the U.S. House and Senate highlighting the beneficial impact the rule changes would have on consumers, especially those in underserved areas, as well as on credit unions.
"Providing the flexibility for credit unions to determine an appropriate field of membership for the members in their communities enhances safety and soundness, fosters competition, and encourages cooperation, resulting in the extension of credit union services to the consumers who need it most, " Nussle noted.
CUNA has launched a full analysis of the FOM proposal, which includes the following highlights. As recommended by CUNA, the plan would:
• Allow for a major improvement in the definition of "rural district." It would allow rural districts 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) charters 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 could 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 would 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.
CUNA members can read more details here in CUNA's summary of the NCUA board's actions.
The agenda also include consideration of the NCUA operating budget through 2017, its 2016-17 annual performance plan, the 2016-17 Corporate Stabilization Fund oversight budget, the 2016 Overhead Transfer Rate, and the 2016 Operating Fee assessment scale. See related stories in this issue of News Now.