<p>WASHINGTON – At the February NCUA Board meeting newcomers JoAnn Johnson and Deborah Matz demonstrated how quickly they can come up to speed on issues, and Matz indicated how independently she may think as she abstained from one of her first votes as a NCUA Board Member. The abstention came in the application of T&C Federal Credit Union of Bloomfield Hills, Michigan to convert to a community charter. T&C, a $356 million credit union formed originally to serve area employees of General Motors, had grown to serve an additional 300 employee groups. The credit union wanted permission to serve the million plus residents of Oakland County, and it was the size of the proposed "local community" that drew Matz's blank vote. "You know better than I that the field of membership is a very complex issue," Matz said to Melinda Love, NCUA's Director of Region Four who presented the application, "and what has given me pause has been the issue of granting community charters [to communities] with an extremely large population, and by that I mean over a million people in the field of membership," she said. Even though the application appeared to meet the legal and policy requirements of the chartering manual, she said, "I am concerned that in regard to community charters [this action] may not be in the spirit of Congressional intent when Congress added the word local to the community charter definition." Matz reported that she asked the NCUA staff for the legislative history of the word `local,' "since it was an addition to the statute" and, when told there was none, she turned to her dictionary. "They define local as not general or widespread, primarily serving the needs of a particular limited district," she said. "With this definition I wonder how large a population a geographic area can have and still be a local community where people interact or have common interests," she asked. "With 1.2 million people in the field of membership, T&C would be double the average size of 10 of the 11 community charters approved since September 2000, she said, and commented that "some would say" that an average of 599,000 members "is still quite large." Matz also declared she was having difficulty coming to grips with what constituted "interaction" as defined in the statute. Five trade areas connected by a highway, Matz said, and 28 autonomous school districts supported by one overarching administrative system. "These may demonstrate interaction," she said, "but I feel it may be a stretch and I am not totally convinced." Matz reported that she was "struggling with this issue and trying to better understand what the congressional intent was." She also said she struggled to understand "how a very broad definition may ultimately impact the future of credit unions in this nation and their ability to serve people of modest means." Johnson picked up on the question of community size in her comments explaining her vote in favor of the T&C expansion. "Oakland County is a very densely populated county," Johnson said, "however the population of the county should not and, in this case, does not preclude the area from meeting our community requirements. While there may be individual municipalities within the county that may also qualify, our rules do not require community charters to be formed at the lowest common denomination," she said. Board Chairman Dennis Dollar said that Matz's vote "clearly indicated" how important it was to understand that the board looked at all charter conversions on a case-by-case basis. T&C became a community charter on a vote of two to nothing with one abstention. Asked about her abstention later, Matz replied that she still felt unsettled about some questions and would continue working to resolve them. Matz brought up the needs of the "underserved" or "people of modest means" at each of the four other charter votes, highlighting those concerns to a degree that some NCUA Board observers, in comments afterward, said had not been as evident in recent board meetings. Matz questioned the ability of Hartford Federal Credit Union to expand from its field of membership of Hartford, Connecticut to that of Hartford County Connecticut, a field of membership of over 850,000 people. Matz directly asked NCUA Region One Director Layne Bumgardener whether, in light of Hartford's 12% penetration of it current field of membership, whether adding more people will dilute service the underserved that the credit union already provided. Bumgardener replied that the credit union already had a history of making careful field of membership expansions and that he didn't anticipate Hartford, a $50 million credit union, would have to dilute its member service because of the expansion. He also explained that Hartford was seeking to "broaden its base" in order to be able to serve more underserved in its field of membership. The NCUA Board approved Hartford's expansion application unanimously. The Board also approved conversions to community charters from Roanoke, Virginia, Wilmington, Delaware and Allentown Pennsylvania. Roanoke Valley FCU, a $20 million institution, received permission to serve a field of membership of over 243,000 in Botetourt and Roanoke Counties. DEXSTA Federal Credit Union, a $125 million institution which was formed to serve Dupont employees in 1937, received permission to serve the over 500,000 residents of New Castle County, Delaware. People First Federal Credit Union, a $181 million institution based in Allentown, Pennsylvania received permission to serve a field of membership of over 579,000 in Lehigh and Northhampton counties. The board demonstrated its ability to work together in its decision to continue the federal credit union interest ceiling at 18%. Unless the NCUA Board acts to maintain it every 18 months, the rate by statute would fall to 15%. Credit unions maintain that they need the higher interest rate ceiling in order to help them continue to make "high risk" loans and compete to keep some of the members out of the hands of other lenders who charge even higher rates. "I had many questions about this issue and was very concerned about how this action might impact lower income members," said Matz. "Again, I would like to commend the staff for the excellent briefing and documentation I received," she said, explaining that though it seemed "counterintuitive" she had come to understand the adverse impact a lower interest rate ceiling could have on lower income credit union members. The board kept the ceiling at 18% unanimously. The board also unanimously approved Wisconsin's Member Business Lending rule, making it the fifth state to have chosen to depart from the federal standard. The Wisconsin rule lowers the equity interest a borrower needs to have in order to participate in a land development or construction loan but increases by two years the amount of experience the borrowing institution needs. The state also made other changes to collateral and security requirements. "This is what dual chartering is all about," said NASCUS President Doug Duerr. "Wisconsin state credit unions now have a unique rule that gives them more latitude in deciding which loans they will make and in granting business-related credit to their members."</p>