NAFCU Pushes The Envelope On FOM

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NAFCU continues to lobby NCUA to stretch the boundaries on field of membership (FOM), an issue on which the national trade association is ever vigilant.

Whether importuning Congress to amend FOM law or urging the federal regulator to extend the membership boundaries, NAFCU has diligently worked the issue at the behest of its membership. The effort has resulted in numerous victories, large and small, starting with the passage of HR 1151, but also extending to efforts to get NCUA to raise its threshold on the so-called expedited approvals to 500 members, and to establish briefer and more definitive time tables for expansion approvals.

In its latest efforts, the trade group has compiled a list of initiatives it believes NCUA can undertake, based on a careful reading of the federal court decision dismissing the American Bankers Association's challenge to NCUA's FOM rules. The list was sent to NCUA's recently reconfigured FOM Task Force, which drafted the implementing rules for HR 1151.

Bill Donovon, chief lobbyist for NAFCU, said the new list was carefully compiled after his staff studied the judge's ruling in the bankers' challenge and includes things they believe NCUA can do without inviting further legal challenges. "We think that case law set by the court would support this," said Donovon.

NAFCU is asking NCUA to reconsider its requirements for community charters, which uses the terminology, "a well-defined local community, neighborhood or rural district." The terminology has provided a hindrance on occasion to community expansions or conversions.

In its letter to NCUA, NAFCU notes that Congress gave very little guidance on the definition of local community, neighborhood or rural district, leaving it to the discretion of the federal regulator to decide the parameters of the phrase. NAFCU asks NCUA to broaden the interpretation of "local community" in order to allow for greater latitude for credit union expansion. As justification for this approach, NAFCU provided NCUA with examples of how a half-dozen federal agencies differ in their own interpretations of the term. "Based on the lack of legislative history, the recent court decisions and other regulatory criteria, NAFCU believes it is clear that a particular population and/or geographic size cannot dictate whether or not the 'local community' requirement has been met and that the process in place for groups whose size exceeds the presumptive community standard could be eased," said the letter.

In the list are also suggestions that NCUA liberalize the "reasonable proximity" requirement for adding a select group by including shared branches to those facilities which could be reasonably proximate to the group; ease the documentation restrictions in HR 1151 on voluntary mergers, and amend the agency's interpretation of "common bond" to allow multiple common bonds to stretch between industries, rather than just corporate ownership.

The credit union lobby is working to get the first two measures addressed in regulatory relief legislation being considered by Congress. However, a key lawmaker made it clear that credit unions' efforts to eliminate the term "reasonable proximity" from the law is a non-starter in the proposed regulatory relief package because of avid opposition from the banks. Yet, amendment of the term, at least through the regulatory process to allow for greater use of electronic facilities, may be more realistic.

NAFCU also asked that NCUA increase the threshold for its expedited expansion process from all groups under 500 to all groups under 3,000, the statutory limit set for all select groups.

At the same time, NAFCU continues to lobby Congress for proposals that would amend provisions of HR 1151 to ease FOM restrictions.

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