NCUA Walks Back from Associational Common Bond Limits

Despite a promising proposal, the National Credit Union Administration today walked back somewhat from its plan to rein in expansive fields of membership for credit unions. The NCUA board approved a final rule amending the associational common bond provisions of the agency’s chartering and field of membership requirements, including a requirement that the association must not have been formed primarily for the purpose of expanding credit union membership.

However, the final rule included carveouts and exceptions that undermine its stated purpose. For example, NCUA expanded the pool of associations that will be considered to automatically meet associational common bond requirements to include parent-teacher associations, chambers of commerce, athletic booster clubs, fraternal organizations and professional associations. It also removed a requirement that an association operate independently for at least a year before being added to an FOM.

“The rule has been significantly weakened,” said ABA’s Brittany Dengler. “NCUA has failed to ensure a meaningful common bond among a credit union’s members. By eliminating all but one proposed threshold, the ploy to create a common bond where one doesn’t exist remains in place.”

ABA has long argued that that there needs to be a meaningful affinity and bond among association members in order to satisfy the associational common bond requirement. While welcoming the original proposal, ABA last year said the rule could be strengthened to ensure FOMs are not being expanded beyond appropriate limits.