The National Credit Union Administration released a 19- page document this week to clarify its new membership rules.
The rules, approved Nov. 14, allow occupation-based credit unions to serve an entire profession, rather than employees at a single company, or change charters so they may serve entire communities.
The NCUA issued the rules in response to an Oct. 25 district court injunction barring occupation-based credit unions from taking on new members who work for companies unrelated to the business that originally sponsored the institution. NCUA is appealing the decision.
In the document, which uses a question-and-answer format, NCUA explained it has expanded the definition of "occupational common bond" to include trades, industries, and professions.
The litmus test for accepting new members is that all the employees within the groups must provide similar products or services.
For example, if a credit union serves all educators in Austin, Tex., people who belong to local Parent-Teacher Associations could not be members.
In contrast, a credit union serving the automobile industry in Sparta, Tenn., could include UAW members because they share the same profession.
Credit unions taking this course have few geographical restrictions. The NCUA said only that occupational credit unions must provide their members with "reasonable" access to service facilities.
NCUA said its regional directors would decide which groups credit unions may accept as members.
To make it easier for credit unions to convert to a community-based institution, the NCUA has streamlined the application process and established a "group community" charter. With this charter, a credit union may serve a mix of occupational, associational, and community groups as long as they are in a "well-defined neighborhood, community, or rural district," NCUA said.
The NCUA's example of a group community charter is Fairfax City, Va., where employees of the ALC Corp., members of the Washington Redskins Booster Club, and parishioners of St. Leo's Catholic Church may all join the same credit union.
NCUA explained that its "well-defined" criterion is automatically met if the area falls within a single political jurisdiction and the population there is fewer than one million people.
Credit unions that want to serve two adjacent counties or an area with more than one million people must make their case to the NCUA.
Mr. Shea writes for the Medill News Service.