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CUNA seeks clarification on NCUA's common bond rule implementation
ALEXANDRIA, Va. (6/30/14)--The Credit Union National Association is filing a comment letter today regarding a proposed associational common bond rule from the National Credit Union Administration. The NCUA's proposal would clarify existing regulations by listing types of associations that can be automatically added to a credit union's field of membership (FOM).

According to the letter, CUNA supports the rule because of its explanations of processes already in use by the NCUA but also believes there are certain clarifications needed. While CUNA supports the inclusion of pre-approved groups into a credit union's FOM, it believes provisions should be added that pre-approved groups could be added without going through the rulemaking process.

One issue CUNA takes with the proposal is the NCUA's reviewing of current associations in some credit unions' FOMs in order to prevent membership abuses. However, CUNA believes the associations already approved should be grandfathered in since FOM reviews are already conducted by the NCUA in response to public complaints.

CUNA also notes that the NCUA should provide more information detailing the actual process of reviews, in addition to guidance and an avenue for appeals.

The proposal also contains a threshold requirement, in which NCUA will determine if an association has been formed primarily for the purposed of expanding credit union memberships. The proposed rule states that if the NCUA determines a group has been formed for that reason, the association will be denied membership to the credit union.

CUNA does not support the threshold requirement but does support the use of a "totaility of the circumstances" test to determine if the association can be added to a credit union's FOM. CUNA supports the use of the test to determine if an association can be added to a credit union's field of membership and supports the use of this test for quality assurance reviews if the agency insists on doing these types of reviews.

However, the letter states that CUNA remains concerned that the NCUA apply the test consistently and requests that the NCUA publish guidelines used by staff when applying the test.
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CUNA Comment Letters
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