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ALEXANDRIA, Va.-NCUA received 493 comment letters on its field of membership proposal by its deadline last week, mostly in favor of the proposals, but many banks and their trade groups threw in their two-cents as well. As was predictable, the credit union trade associations generally supported the revisions the NCUA Board proposed to the Field of Membership and Chartering Manual and added some of their own suggestions. “NAFCU believes the proposed changes will provide a significant benefit to consumers through increased access to federal credit unions and will reduce regulatory burden,” NAFCU President and CEO Fred Becker wrote. CUNA and NAFCU both applauded NCUA’s TIP proposal, which would allow select employee group additions to single group credit unions or single sponsor credit unions to be chartered based on a common trade, industry, or profession. However, both groups advocated a broader interpretation, specifically eliminating the geographic limitations and that multiple group credit unions should also be eligible to add SEGs in this manner. “Without a broader geographic scope,” USA Federal Credit Union Executive Vice President Thomas Alter summed up in his comment letter, “this option may be useless.” Four board members and the CEO of American Airlines Federal Credit Union wrote in with particular interest in the TIP. “Almost all of U.S. airlines are in turmoil and only with extensive changes in their business models and substantial reductions in cost structures will the current major air carriers survive,” AAFCU Board Member Eli Vazquez wrote. “As a consequence, a very significant percentage of American Airlines Federal Credit Union members have experienced, or face the prospect of, job loss or reduced household income. “The proposed TIP for single sponsor credit unions appears to be a positive opportunity for consideration by the American Airlines Federal Credit Union Board of Directors if and when circumstances dictate the wisdom of an expansion or our FOM.” However, the AAFCU representatives objected to multiple group credit unions being able to use the TIP citing other manners for them to add new potential members. ChevronTexaco Credit Union President and CEO James Mooney requested clarification on the provision that companies involved in more than one industry cannot be included in a TIP. He pointed out that many organizations are in various industries, but typically are primarily involved in just one, such as manufacturing firms with financing subsidiaries. Two other key amendments included the broadening of the definition of `local’ in determining community charters and `reasonable proximity’ when adding SEGs. CUNA and NAFCU generally supported these changes. Under NCUA’s proposal, `local’ would be expanded to mean 1) a city, county or smaller political jurisdiction without the credit union providing a letter proving it is a community; 2) a metropolitan statistical area (or equivalent) of one million or less my meet the definition with a letter demonstrating the community; and 3) increasing the presumption of a local community from 200,000 to 500,000 residents for multiple political jurisdictions with a letter explaining the community. NCUA is also looking to expand `reasonable proximity’ to include service centers with any ownership interest, rather than the current 5%, and permitting wholly-owned ATMs to serve as service centers when determining reasonable proximity for adding SEGs. CUNA wrote in its comment letter, “We do not believe there is a legal or safety and soundness reason to preclude such credit unions, that own ATMs with a limited number of other credit unions, from using such a jointly owned ATM to meet the `reasonable proximity’ standards in the Act.” However, in a press call last week, CUNA Associate General Counsel Mary Dunn commented, “We support what NCUA is doing, but we feel there needs to be a commitment from the credit union beyond just putting up an ATM machine-that they’re going to serve the area, serve the individuals . that they’re going to bring in.” The sentiment was also included in CUNA’s comment letter. NAFCU wrote that a credit union should not be required to have any type of ownership interest in either instance, and that “degree of ownership has neither legal nor practical significance.” CUNA agreed that a shared service facility should be used to demonstrate reasonable proximity, so long as the federal credit union’s participation in the facility “results in a demonstrable connection with the service area.” The trade group also suggested that a national association located near a service facility, rather than a credit union’s headquarters as proposed, be eligible to become a SEG. Additionally, NAFCU asked that NCUA broaden its voluntary merger policy and revise the definition of “investment area.” As usual, when credit unions are granted broader powers, the banking groups and their members raise complaints. American Bankers Association, America’s Community Bankers, and the Independent Community Bankers of America all wrote that NCUA’s proposal violates the Credit Union Membership Access Act, renders the common bond meaningless, and should lead to credit union taxation. ICBA wrote, “Fundamentally, the ICBA believes that many of the proposed changes undermine completely the concept of the common bond, rendering it meaningless. The key tenet underlying the credit union charter is the existence of a common bond. The more that the NCUA disregards that fundamental element and allows membership to a broad variety of individuals that do not share a true common bond, the less significant the common bond becomes. And, if there is no common bond, then the justification for the credit union charter disappears.” ACB argued that small credit unions would be the entities hurt by the proposal. “Taking away overlap protection will overwhelm small credit unions oriented to serving the provident credit needs of a well-defined group of individuals,” ACB Director of Regulatory Affairs Charlotte Bahin wrote. ABA’s official comment letter added, “These modifications circumvent Congressional intent as expressed in CUMAA and in the underlying statutory authority for chartering Federal credit unions and establishing their fields of membership. In proposing these modifications, NCUA fails to adhere to CUMAA’s mandate to structure Federal credit unions’ fields of membership within `a meaningful affinity and bond among members in the context of shared and related work experiences, interests, or activities, the commonality of routine interactions, and a well-understood sense of cohesion or identity.’” Many of the individual banks cited these same oppositions. “I have no fear of competition,” 1st National Bank President Skip Numrich of Kansas wrote. “In the long run competition is good for the consumer and the banking industry. However, I do object to tax subsidized competition that continually out does itself to skirt or blatantly ignore it (sic) own regulations or congressional intent.” Running counter to this, Congressmen Steven LaTourette (R-Ohio) and Paul Kanjorski (D-Pa.), authors of CUMAA weighed in on the issue. “As members of the Financial Services Committee and authors of the Credit Union Membership Access Act we are pleased to see that you have used the latitude that has been conferred upon you by law in preparing these changes,” the congressmen wrote in a Jan. 28 comment letter. “We hope that the Board will take action to enact these proposed revisions when the comment period has expired.” But, bankers are not the only ones to object to NCUA’s proposal. The Chicago-based Woodstock Institute argued that credit unions have not proven themselves worthy of broader powers. “We believe that increase powers and liberalized rules for credit unions should not occur in the face of credit unions’ lack of service to lower-income people. Field of membership rules should not be expanded until the credit union movement can show, through publicly available data similar to Home Mortgage Disclosure Act (HMDA) data, that credit unions are in fact, not just in theory, serving low-income people,” Woodstock Institute President Malcolm Bush wrote. [email protected]

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