ABA Opposes New Overreaching CU Membership Proposal

In a comment letter to the National Credit Union Administration today, ABA expressed strong opposition to an additional proposal by the credit union regulator to amend its chartering and field of membership requirements for federal credit unions seeking community charters. The proposal would increase the population limit on areas served by community chartered FCUs from 2.5 million to 10 million and would allow charter applicants to submit a narrative and supporting documentation to support the presence of a “well-defined local community,” based on a broad range of criteria.

ABA said that the proposed fourfold population threshold increase “blatantly ignores” the definition of “well-defined, local community” established by Congress and would allow credit unions to expand service to large regions where no meaningful close-knit interaction exists among residents. In special cases where an FCU seeks to serve an area with a population in excess of 2.5 million, ABA recommended that the NCUA establish a process for public notice and comment on the proposal and require a board vote for charter approval.

The association also opposed the use of a narrative method for demonstrating a well-defined, local community in place of the more objective model currently used by the NCUA. ABA pointed out that, as proposed, narrative applications would not be required to address all 13 criteria identified by the board in order to qualify for a community charter, and raised concern that allowing credit unions to selectively include or exclude information could result in an incomplete analysis and biased decision. Should the NCUA allow narratives to be used, ABA urged the board to require applications to address all 13 criteria and be open to the public for comment. For more information, contact ABA’s Brittany Kleinpaste.