Debating NCUA’s Proposed Ban on Home-Based Credit Unions
Part of the proposed rule, which would go into effect two years after the final rule’s effective date, would prohibit federal credit unions from operating out of homes, or even storing records there.
Video CUTs from NCUA Dec. 12 Meeting:
Matz Says ‘No’ to Home-Based CUs
Fryzel Says 'No' to Home-Based CU Restrictions
Metsger Explains His Positions
Daniel Morrisey, treasurer/CEO at the $2.1 million Queen of Peace Arlington Federal Credit Union in Virginia, doesn’t feel an outright ban is justified as it can mean the difference between members having a credit union and no credit union at all.
“I also am especially concerned that this outright ban would also apply to short-term use of a home in a disaster recovery situation or some kind of short-term space issue,” wrote Morrisey.
“Many years ago, during a several month ‘issue’ with our sponsor, our credit union operated out of our living room, dining room and garage – until satisfactory arrangements could be made to get space again from our sponsor.”
Dean Birge, vice president of finance at the $546 million Santa Clara County Federal Credit Union in San Jose, Calif., agreed with many who felt the NCUA is over reacting and that a balance must be struck.
“If records storage and information security is a concern, then this can be raised as a ‘safety and soundness’ or ‘best practices issue’ in the examination report,” said Birge. “Is this the most pressing issue for the NCUA to be addressing?”
Carolyn Warden, business systems analyst at Alabama-based core processor EPL, shared her perspective of when she was a young NCUA examiner. One home-based credit union bought a fixer-upper house to make it their office and she was worried about the credit union turning almost 5% of interest earning assets into a fixed asset.
“This examiner was wrong,” said Warden. “That CU grew bigger and stronger. Same education field of membership, same location, 30 years later, exponentially larger and a positive resource in its community. Home-based CUs need to make the strategic decision if they want to be perceived as someone's hobby or an insured financial institution. It's past time to decide. Credit unions should be about the members' needs. Not the examiners' fears of bathroom germs!”
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