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FOM Proposal Intends to Help Consumer Access to CUs
Friday, November 20, 2015 6:45 AM

The National Credit Union Administration on Thursday voted to seek comments for 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 CFPB 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.