Late last year, the NCUA announced it would launch a working group to study field of membership. Thus far, theagency has simply said the group will be reaching out tostakeholders in the coming months for input. NCUA Chairman DebbieMatz' comments during the recent board meeting indicated that theagency would be looking for solutions within the Credit UnionMembership Access Act, indicating that regulatory changes would beup first, but hopefully that does not preclude the necessarylegislative push for greater flexibility.

NCUA Board Member Rick Metsger recently suggested five areas onwhich the agency should focus, and they're a good start. Theyinclude regulatory relief for community charters and credit unionsserving underserved areas and low-income families.

This issue hits home for Metsger, who came to the NCUA fromOregon, where two large credit unions converted from the federalcharter for the broader field of membership opportunities of an Oregon state charter.No matter how they tried, there was no way for the $914 millionRogue Credit Union in Medford, and the $885 million Oregon StateCredit Union in Corvallis, to structure their long-term growthplans within the confines of the federal charter. That's a realproblem for the long-term viability of the NCUA if credit unionscan't grow under the federal charter.

NAFCU is also legitimately concerned about the restrictive FOMinterpretations. NAFCU's Carrie Hunt recently wrote CU Times, statingdifferent FOMs should find it easier to merge, and not exclusivelyin emergency situations. She added that all federal FOMs shouldpermit the addition of underserved areas, no matter the chartertype, and wild-card parity with state FOM rules regardinggeography.

If the underserved area point that everyone is making soundsfamiliar, that's because the NCUA passed a more restrictive policy,allowing only multiple common bond credit unions to add underserved areasfollowing the American Bankers Association's 2005 legal challenge to acommunity charter adding underserved areas. This attempt came aftera previous legal challenge reversed the NCUA's approval of asix-county FOM for the same credit union; the NCUA declined tofight the second challenge.

Following Metsger's letter, Tom O'Shea, president/CEO of the now$173 million Aspire Federal Credit Union in Clark, N.J., wrote awell-reasoned letter in response, copying the entire NCUA board andme. “There is far too much risk in the limited FOM optionsavailable to our credit unions in today's volatile economic times,”he wrote. FOM is antiquated in the face of modern technology,branches are expensive operations that cannot be economicallyjustified though required by regulation, and it createsconcentration risk. He advocated that FOM rules be as liberal aspossible, and, “Let the member decide if the credit union they areconsidering joining meets their service needs.”

Novel concept.

O'Shea said Aspire already has three associations within itsFOM, but adding them is becoming increasingly difficult. The creditunion has even been asked to submit the financials of theassociation, which is not required for a select employee group.

Jim Blaine, president/CEO of the $29 billion State Employees'Credit Union in Raleigh, N.C., is less convinced that FOM is a truelimitation. Serve your niche, and you can't go wrong. True, andeven easier to say when the credit union's niche is an entiregrowing state, but Aspire's niche is technology-savvy memberswithin its FOM. Is that less of a common bond than living in acertain county? Could my high school alumni Facebook page be a moremeaningful community than my county? How can “local” from theFederal Credit Union Act be re-interpreted?

According to credit union consulting firm Dollar Associates, theNCUA's 25-mile reasonable proximity interpretation is just that—theagency's interpretation that could use an update. However, the onlyupdate the agency has considered of late is the rule from lastApril to crack down on a few envelope pushers that are formingassociations as an FOM end run, which of course will punish everycredit union looking to expand through associations, which ispermitted by law. And, if enough cannot be accomplished withinCUMAA, then the fight needs to be taken—with the NCUA'sassistance—to the Hill.

Sarah Snell Cooke is publisher and editor-in-chief of CUTimes. She can be reached at [email protected].