ABA Chides NCUA for Membership Rule Overreach

The National Credit Union Administration voted today to expand the already loose fields of membership from which federal credit unions can draw their customers, further erasing the distinctions between credit unions and banks. “We’re very concerned that NCUA’s proposal will enable credit unions to move even further away from the common bonds that define their missions,” said ABA’s Rob Nichols. “When credit unions are allowed to have so-called common bonds like ‘lives in Montana,’ or advertise that ‘anyone can join,’ the common bond ceases to be a meaningful requirement.”

Under NCUA’s proposal, FCUs would be able to apply to serve combined statistical areas, which are larger than metropolitan areas; areas contiguous to their existing core-based statistical areas; and entire congressional districts, including at-large districts that encompass entire states. NCUA would also facilitate easier conversions to community charters and easier expansion of fields of membership in rural areas.

The proposal would also redefine a “service facility.” Multiple common bond FCUs are allowed to serve groups within a reasonable proximity of these facilities, and under the proposal mobile and online banking platforms would be included so that FCUs could apply to include individuals in related occupations or associations in their fields of membership even without physical proximity.

“Recognizing that Congress is deadlocked on most financial issues, the agency has an obligation to the system to modernize rules,” said NCUA Vice Chairman Rick Metsger. Nichols responded that “all taxpayers should be concerned that NCUA continues to find ways to hijack the authority of Congress, which has set appropriate limits on credit union activities in return for a tax-exempt status.” Comments are due 60 days after the proposed rule is published in the Federal Register. For more information, contact ABA’s Brittany Dengler.