Removing Barriers Blog

Comparing NCUA FOM Final Rule to CUNA's Requested Changes
Posted October 31, 2016 by CUNA Advocacy

 

NCUA’s Field of Membership Rule

Final Rule vs. Requested Changes

 

CUNA Requested Change NCUA Final Rule Victory
Include a combined statistical area in the definition of well-defined local community.   An FCU will be able to apply to serve combined statistical areas, as designated by OMB, subject to a population cat of 2.5 million, under the new proposed rule this will increase to 10 million. (For example, with the proposed population increase in the new proposed rule, a credit union could serve the entire Washington/Baltimore metro area)     Y
   
Allow a Congressional district to be considered a well-defined local community (this would allow credit unions to serve an entire state in a state that has only one Congressional district).   The Board deferred action on this proposal at this time, however, with the adjustments to this final rule, and the narrative approach provided by the new Proposed Rule, it is likely the same geographical area can be obtained through different means.     Y  
Eliminate the population test associated with the definition of “rural district.”   Rural district population limit is increased to 1,000,000 – regardless of the stat in which the majority of the district’s population is located (up from the previous 250,000 or 3% of the population of the state in which the majority of the district’s population is located).     Y
   
Reinstate a narrative approach for defining a community.   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.  Additionally, the new Proposed Rule, reinstates a full narrative approach to establishing common interests among residents of an area it proposes to serve, thus qualifying it as a well-defined local community, rather than relying on a “presumptive community,”     Y
Eliminate the geographic limitations on TIP charters.   Definition of a TIP 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.     Y  
   
Allow groups with 3,000 or more potential members to more easily be added to multi-group federal credit unions.  Streamlined process for stand-alone feasibility of groups between 3,000 and 4,999 potential members (in addition to the existing streamlined process for groups less than 3,000).       Y
   
Increase the population limit used for Core Based Statistical Areas (CBSA) from 2.5 million to 10 million This is included in the new Proposed Rule which increases the limit from 2.5 million to 10 million.     Y
   
Eliminate the requirement that a CBSA contain a “core”; 


A community common bond charter will no longer be required to serve the core area if electing to serve a portion of a CBSA.     Y
   
Expand affinity groups for community chartered credit unions beyond those who live in, worship in, attend school in or work in a community.  This should be expanded to include those who work for a business headquartered or are paid from a business located in a community The rule expanded affinity groups for Military Personnel Partial
   
Redefine “rural district” by eliminating a population test and using a test similar to that of the U.S. Census Bureau as an area that does not contain a majority of land area in an Urbanized Area or Urbanized Cluster; While not precisely, the rule does allow for serving a rural district of up to 1 million persons regardless of the state in which the majority of the district's population is located.     Partial
   
Allow a TIP to add vendors and their employees that support the trade, industry or profession; TIP Charters may now include employees of entities that have a strong dependency relationship with other entities within the same TIP     Y
   
Allow a professional-based TIP to include co-workers who support the professional’s day-to-day delivery of services and to include recipients of the professional’s services when those recipients are not customers or clients  TIP Charters may now include employees of entities that have a strong dependency relationship with other entities within the same TIP     Y
   
Permit FCUs that convert to a community charter to keep approved groups in their FOMs that are outside the boundaries of their new community

The Board reaffirmed that grandfathered members and groups will remain members even if they no longer meet the FOM criteria (Once-A-Member); however, this does not allow a cu that converts to a community charter to continue to use the prior SEG as a qualifier for FOM purposes for new members.  NCUA did make the ability to expand the geographic community much easier by increasing some of the population limits and are now allowing the narrative approach which will allow for substantial creativity in defining a community boundary.  Also the ability to serve underserved areas is easier now as well. 

Partial
   
Permit a state credit union converting to an FCU to keep its current field of membership and expand based on NCUA’s field of membership policies

The Board reaffirmed that grandfathered members and groups will remain members even if they no longer meet the FOM criteria (Once-A-Member); however, this does not allow a cu that converts to a community charter to continue to use the prior SEG as a qualifier for FOM purposes for new members.  NCUA did make the ability to expand the geographic community much easier by increasing some of the population limits and are now allowing the narrative approach which will allow for substantial creativity in defining a community boundary.  Also the ability to serve underserved areas is easier now as well. 

Partial
   
Allow any FCU to serve a combination of contiguous communities and single political jurisdictions (SPJs) that do not exceed in population size or land area of the largest community that NCUA has already approved which means 10 million people or a land area of 20,000 square miles; With full narrative approach from the new proposed rule, credit unions will be able to achieve this and more.     Y