WASHINGTON (11/28/12)--The National Credit Union Administration's (NCUA) move to expand the definition of "rural district" for fields of membership is a positive step, but could go even further, the Credit Union National Association (CUNA) said in a comment letter.
The NCUA in late September approved a proposal that would provide more flexibility to federal credit unions serving rural areas by expanding the rural district definition to geographic areas with 200,000 or fewer inhabitants or less than 3% of a given state's population. In a comment letter released this week, CUNA Deputy General Counsel Mary Dunn said the NCUA proposal does not go far enough to provide meaningful relief to those credit unions that provide services to rural communities.
CUNA analysis has found that states such as Wyoming, South Dakota, North Dakota, Montana, Alaska, Maine, West Virginia, Idaho, Utah and Nevada will not see additional relief under the recent NCUA proposal because rural districts in those states constitute a higher percentage of the state's total population. The NCUA has indicated that only 13 states will be able to obtain more flexibility for rural districts if its proposed definition change is approved. Those states include the most populous in the nation, such as California, New York, Illinois, Florida, Ohio, and Pennsylvania. Moreover, the larger the state, the greater the relief would be afforded under the current proposal, CUNA added.
"While credit unions in the 13 states affected by NCUA's proposal deserve relief, credit unions in other states do as well," CUNA said.
Dunn said the agency has the legal authority to expand the definition of "rural district" beyond what it has proposed. She urged the NCUA to allow as much authority as legally permissible to federal credit unions to facilitate their presence in these areas of the country that are often are in serious need of financial institution services.
The CUNA comment letter suggested the NCUA allow credit unions that serve rural areas to determine for themselves the size of their fields of membership, governed by the credit union's resources to serve the area sufficiently and its ability to manage safety and soundness concerns.
CUNA urged the NCUA to consider this approach and to further analyze how the "rural district" definition could be further modified to ensure credit union service continues in rural areas of the country. In the meantime, CUNA suggested the NCUA could grant rural credit unions greater flexibility by amending its proposal to allow credit unions to serve districts with populations of up to 500,000 or 4% of the state's population, whichever is greater.
For the full CUNA comment letter, use the resource link.