As expected, the major bank trade associations have issued sharp criticisms of the NCUA board's approval of expanded field of membership rules at its most recent meetings.
Both the American Bankers Association and America's Community Bankers (ACB) have blasted the decision, while all three NCUA board members have issued statements explaining why they support the decision.
"The National Credit Union Administration has once again overstepped its bounds," said ACB. "The expanded regulation issued is contrary to the Federal Credit Union Act and the Credit Union Membership Access Act. Allowing credit unions to expand with no regard to the common bond requirements of the laws encourages the continued unbridled growth of large, bank-like credit unions at the expense of small credit unions and tax-paying banks."
But NCUA Chairman Dennis Dollar said the policy of expanded FOMs is based upon an established foundation of safety and soundness, and that it enhances the risk diversification of credit unions, protects broader consumer choice, and will ensure a stronger federal charter option necessary for an effective dual chartering system.
Dollar cited a Jan. 28, 2003, comment letter from Reps. Paul Kanjorski (D-PA) and Steven Latourette (R-OH), co- sponsors of HR 1151, in support of the decision. "As members of the Financial Services Committee and authors of the Credit Union Membership Access Act we are pleased to see that you have used the latitude that has been conferred upon you by law in preparing these changes," the letter stated.
Dollar further stated that NCUA's position already has judicial approval. "The courts have ruled decisively in upholding our earlier field of membership rules passed under the authority of CUMAA that visionary credit unions must have the opportunity to adapt to a changing financial marketplace," Dollar said.
NCUA Vice Chairman JoAnn Johnson said the new rule reflects changes in the marketplace since the passage of the Credit Union Membership Access Act (CUMMA in 1998, and noted credit unions will still have to provide detailed business plans for serving expanded fields.
NCUA board member Deborah Matz note dthat the final rule will permit CUs to serve an estimated additional 56 million people who do not have accounts in insured institutions.