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Stratton, Lark Comment on Expanded Field of Membership
Monday, February 22, 2016 6:55 AM

Stratton, Lark Comment on Expanded Field of Membership

Tinker Federal Credit Union supports new field-of-membership (FOM) rules, Senior Vice President Matt Stratton said. TFCU submitted a letter to the National Credit Union Administration expressing that opinion during the comment period that ended earlier this month.

“Most of what they’re recommending are common-sense changes,” Stratton said. “I don’t know that it would change a lot for Tinker, but we believe it would benefit the entire financial services marketplace. Folks who need credit unions also need options."

Credit union FOMs have been capped at 250,000 members. The proposal would allow rural districts to comprise up to 1 million residents by changing measurement standards. It also would streamline the process to add groups with up to 5,000 potential members, instead of the current 3,000.

The changes would allow a congressional district to be considered a “well-defined local community” to support a charter application and eliminate geographic limitations on industry or profession charters.

Stratton and other Oklahoma credit union representatives said a change is past due; it has been more than 15 years since the NCUA made any significant changes in FOM rules for federal charters.

Stephen Lark, vice president at Communication Federal Credit Union, said the proposal would help credit unions reach underserved or underbanked consumers, many of whom have difficulty establishing bank accounts.

“It’s more than a surface issue,” Lark said. “Presently, there have to be studies done to determine an underserved area. Better definitions will help credit unions by not requiring them to invest as much in that market research.

“The largest impact to us will be in streamlining and clarifying how groups are added,” he said, adding that Communication Federal recently struggled with providing service to employees at a new spinoff unit from a larger company.

Stratton said he anticipates opponents of the measure will try to connect a larger membership base with credit unions’ not-for-profit business model. “We always have to remind folks that our tax structure is based on a not-for-profit, cooperative structure rather than how many people we serve,” he said.

Indeed, the Oklahoma Bankers Association submitted its own letter to House and Senate committees asking them to scrutinize tax implications. “The proposed changes should call into question whether the 82-year-old tax exemption is appropriate in the modern era,” OBA officials said in a prepared press statement following the letter. “We are calling for Congress to level the playing field between tax-paying banks and tax-exempt credit unions that are otherwise virtually identical.”

The American Bankers Association and Independent Community Bankers of America have established similar positions, alleging the proposal exceeds limitations outlined in the Federal Credit Union Act.

Source:  The Journal Record, Feb. 17, 2016