Political considerations are apparently working their way into NCUA board deliberations, at least on the issue of community chartering.
It's not the kind of partisan politics that mark so much of what goes on in Washington, but the effects that NCUA decisions will have on credit unions in a broader sense, on Capitol Hill and beyond.
At least that's how NCUA Board Member Deborah Matz sees it. Matz is gaining a reputation as the great dissenter, only because she has dissented on a number of initiatives when NCUA deliberations are generally known for their unanimity. The most recent case was when Matz was on the losing end of a two-to-one vote to approve a community expansion for Tooele FCU, in Tooele, Utah. The six-county grant, which encompasses as many as 1.6-million people, is the largest ever, by population, approved by NCUA.
Matz said her reticence was based not only on the difficulty in defining the six-county area as a single community whose residents interact on a regular basis, but on the political considerations, as well. "I don't think it meets the requirements (for a single community)," she said afterwards. "Above and beyond that, I felt that approving it was bad timing because it gives ammunition to the bankers."
She may be right. This reporter has also been pressured on several occasions to downplay community chartering or other field of membership (FOM) requests in order to keep that information from the bankers.
But when is the right time for NCUA to expand the boundaries of its community chartering rules and regulations, which are clearly designed at extending credit union services to as many people as possible? While NCUA keeps pushing the limits on federal chartering, those limits have been exceeded many times in various states, including Texas, Florida, and California, where a half-dozen state charters have received permission to serve communities exceeding 10- million people.
This is a debate better conducted in public than behind closed doors-the better that more parties can participate. I think all segments of the credit union movement deserve to know what is going on.
What Matz is worried about is the bankers and their allies using the community chartering trend, with its ever wider parameters, when they continue their efforts to rein in credit unions or to attack the tax exemption. In fact, the bankers are using that information for those purposes. The question is, should the credit union movement be wedged in by what the bankers are doing? Should it affect the federal regulatory process?
There is no doubt the bankers will continue to come after credit unions in the courts and in the legislatures, as well as in Congress. So far, they have had limited success. But if any group has staying power it's certainly the bankers.
There was strong evidence presented that the six-county region requested by Tooele FCU could be considered a single community under NCUA's FOM rules and regulations. Among them are the fact that five of the six counties are members of the so-called Wasatch Front Regional Council. In addition, the vast majority of the residents of the region consider nearby Salt Lake City, the home of the Mormon Church, as their commercial, social and religious hub. In addition, the $160-million credit union has a penetration rate for its current FOM of something like 72%, indicating it drastically needs to expand to continue to grow.
These arguments were good enough for both NCUA Chairman Dennis Dollar and Vice Chair JoAnn Johnson, who voted for the charter expansion. But not for Matz, who said the evidence was still lacking that there was proper interaction among the residents.
Matz said in the days working up to the Tooele FCU vote she received dozens of messages and e-mails from sources, both for and against the application. "I've never received so much lobbying since I've been here," she said. The other board members are also believed to have been lobbied vigorously
The debate among the NCUA board mirrors a much broader debate among both the credit union movement, lawmakers and the bankers, too. While NCUA continues to expand its definition of a community, valid arguments can be made that it is not broad enough. A good case can be made that entire states, where residents all pay the same taxes, qualify as single, well-defined communities. New Hampshire, for example, recently awarded its third statewide FOM. If small cities qualify as single communities, is there any doubt that the city of New York, and its almost nine-million inhabitants, is a community? We native New Englanders always considered ourselves part of the same community, as well. Heck, we're all Red Sox fans.
As NCUA Chairman Dennis Dollar said during the recent debate over the Tooele FCU application, "a community is in the eye of the beholder."
CU Journal Washington Bureau Chief Ed Roberts can be reached at 202-434-0334, or at eroberts cujournal.com.