Washington State Regulator Takes Steps To Streamline FOM Expansions

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A proposal to streamline field-of-membership applications has state-chartered credit unions here anticipating a reduction in regulatory burdens and unwieldy paperwork.

The next step is a public hearing on the proposal set for Jan. 23.

The new rule proposes that CAMEL 1 or 2 rated credit unions skip the time-consuming regulatory process and add to their fields of membership through approval by the their respective boards, according to Stacy Augustine, vice president of governmental affairs at the Washington Credit Union League.

"If the board votes it in they don't have to go through the regulatory process," Augustine explained.

The proposal does limit qualified occupational, association or community groups to no more than 6,300 potential members in size.

"The reason we got 6,300 was the regulator did a statistical analysis of credit unions that have been started in Washington both successfully and unsuccessfully and it seems that a [group] with more than 6,300 potential members could probably support its own credit union," Augustine said.

But a proposed FOM can exceed that number as long as it is already part of another credit union's FOM, according to Parker Cann, director of credit unions at Washington's Department of Financial Institutions.

In order to protect smaller credit unions from being overwhelmed by larger credit unions, a marketing provision was added to the proposal, though there has been little concern or opposition to the proposed streamlining, Cann related. "We have some marketing restrictions currently in our rules and this rule would broaden those out," he said. "There are some of those kinds of protections built in."

The rule will serve Washington credit unions well, Cann believes. "We approve nearly 100% of these applications and it seems to me a needless paper exercise," he noted. "We don't see that the approval of groups adds or creates a safety and soundness issue."

Because comment letters have all been favorable and opposition is unexpected, Cann said he hopes to complete the process within a week of the public hearing and implement the new rule 30-days after that. The recent resignation of Washington DFI director John Bley should have no impact on the rulings, Cann observed.

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