It's time to toss outmoded common bond and FOM

Credit unions people spend a lot of time debating common bond and field-of-membership issues, almost as much time as the banking industry and state and federal credit union regulators. What a colossal waste of time! There is no point in repeating here all the monkey business that credit unions must endure when they seek to grow. Or even the inconsistencies within NCUA regions related to the lengthy and convoluted approval process to make membership changes. They are well documented and in the news every day, usually in articles reporting on charter conversions. Instead, I suggest the terms be banned from the credit union vocabulary. Only one credit union leader has had the courage to come right out and address the topic of common bonds and fields-of-membership. Doug Duerr, CEO of the National Association of State Credit Union Supervisors (NASCUS), recently stated flatly that the terms no longer make sense, if in fact they ever did. Of course there are many individuals both within and outside of credit union land that would disagree with his assessment. By now Duerr has probably caught a lot of flack. He shouldn't. If credit unions are such a wonderful thing, and they are, I agree with Duerr that as many people as possible ought to have the opportunity to join one. As a matter of fact, my personal vision for credit unions has long been that I won't be happy until every man, woman, and child in this country who wants to join a credit union can do so. Do I have all the answers on how to accomplish that vision? No, but I think achieving such a goal is something that should be top priority for every credit union and all credit union leadership. For starters, like Duerr, I have long felt that individual credit union policymakers should be able to decide who can belong to their credit union. Certainly that decision shouldn't be dictated by outsiders such as the banking industry. Nor by uninformed politicians who notoriously vote for what's best for themselves rather than what is best for their constituencies. Nor should who can belong to a credit union be arbitrarily decided using outdated, inconsistent, and artificial parameters as the regulators are currently doing. Stepping outside of credit unions for a moment, most Americans are familiar with a huge (34 million members) not-for-profit national membership organization called the American Association of Retired Persons (AARP). Many credit union people are members. They know the types of services that AARP provides its members. They may even know that from the day it was founded by Ethel Percy Andrus of the California Retired Teachers Association in 1958, the organization competed with the private sector. Yet, AARP has never paid federal taxes. As a not-for-profit, it continues to this day as a tax-exempt organization. It is also fairly well known that the group was started because of discrimination. Andrus was outraged that insurance companies discriminated against older people. She decided to take matters into her own hands. Today AARP is regarded as among the most powerful and influential lobbies in the country. As its name makes clear, 42 years ago AARP set out to serve Americans over the age of 65, at that time considered the normal retirement age. Hence the name the American Association of Retired Persons. As the organization grew and began offering more and more products and services of interest and value to older Americans, something else was also changed. AARP was so successful serving those 65 and older that its leaders decided, why not extend our reach? The rules were changed to serve persons 60 or older. Then 55 or older. Then 50 or older. At its most recent national convention held in Orlando, Florida, one of the major agenda items was "how can we attract and serve younger people?" Maybe 45 or older? Or 40? Or? Another important discussion centered around the need to change the organization's name to more accurately reflect who it serves and what it does. (Sound familiar?) Despite all these major changes, past and future, AARP is still tax-exempt. In fact, the subject of AARP's tax-exemption never comes up. Why not? Because all AARP did was change its membership qualifications. On its own, without government help or influence, AARP's leadership decided whom they wanted to serve. They didn't change any common bond (retired persons) or field-of-membership (persons over 65). They simply decided to change the membership qualifications. Turn now to credit unions. Duerr and the many credit union leaders who agree with him, but don't have his courage to step forward, is not suggesting that credit unions be thrown wide open to the general public. What he is suggesting is something that individual credit unions have the right to determine their own membership qualifications. If a credit union's leadership determines that it can serve a particular geographic area, or certain group of people by profession, religion, hobby, or whatever, they should be allowed to do so. Of course, where the regulator must still come into play is making certain that the credit union can prove that it can do what it sets out to do without affecting the safety and soundness of the credit union. Basing whom a credit union can serve by letting the credit union itself determine its own membership qualifications makes so much more sense than the complicated mess we currently have. It's just plain silly to make membership decisions based on, for example, 25 mile barriers and expansion by counties or ZIP codes. No wonder there is so much confusion regarding whether a credit union is a SEG credit union, a community credit union, or a hybrid. Allowing a credit union's leadership to operate in terms of membership qualifications makes sense for everyone, including the banks, but especially for credit union members and potential members. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail mwelch@cutimes.com.