ALEXANDRIA, Va. - The board of the National Credit Union Administration has adopted a rule letting some credit union employees receive bonuses related to loan volume.

The board also issued for comment a proposal that would put new restrictions on credit unions seeking to bolster their membership by creating affiliated clubs for senior citizens and retirees.

Current regulations allow credit unions to pay performance-based bonuses to all employees. The new incentive rule, approved Thursday, goes further by permitting federally insured credit unions to pay bonuses based on lending activity to all employees except senior managers.

The rule, which will become effective on publication in the Federal Register, is more liberal than a proposal issued earlier this year that 70% of 105 commenters criticized as being too restrictive.

Chairman Norman E. D'Amours of the National Credit Union Administration Board said he hoped the new rule satisfied the industry.

"It's an instance of us not imposing our morality or judgment - or anybody's" on credit unions, Mr. D'Amours said.

Nevertheless, the memorandum accompanying the final rule made it clear that the agency was not totally comfortable with giving into industry demands to deregulate incentives.

"The board wishes to make clear that this action is not intended to encourage lending-related incentives," the memorandum said.

The board's other action, proposing a rule clamping down on institutions that form clubs to qualify senior citizens and retirees for credit union membership, was put out for comment in response to a recent court case.

In May a federal judge declared illegal one such association at Houston- based Communicators Federal Credit Union.

"We are not confident that a different challenge would net a different result," agency associate general counsel Richard S. Schulman said in introducing the proposal.

Indeed, on Sept. 5 a law firm representing the Indiana Bankers Association threatened to sue over a move by Philips Electronics Federal Credit Union, Fort Wayne, to accept members through such a club.

Under the Board's proposal, which will be out for comment for 60 days after publication in the Federal Register, credit unions can help form such associations, but they must be full-fledged organizations with bylaws, not just gateway clubs.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.