Location is important in nearlyall businesses for various reasons, whether it be accessibility orsecurity or tax treatment. It's a cost of doing business. At itsDecember meeting, the NCUABoard issued a proposed rule that would require federalcredit unions to operate out of commercial buildings zoned forretail use. The very fact that the agency has to issue a rule aboutthis is preposterous.

Running a credit union out of someone's home presents majorsafety concerns. Any mentally unbalanced or criminal member couldthreaten the manager with no one else around, or worse yet, withfamily present. Examiners could be attacked by managers with nowitnesses to what happened. Managers have challenged that examinershave no right to access home-based credit unions. While an extremecase that actually did occur in a commercial building,the TaupaLithuanian Credit Union scenario was a huge eye opener tothe safety issues examiners could face, and stockpiling a weaponsarsenal would be much more likely and potentially legal insomeone's home. Other less dramatic safety issues are of realconcern for members and examiners, such as rickety staircases ordog bites. Really, who wants to see a rabid examiner?

Privacy concerns are another obvious problem for a home-basedcredit union. It is difficult to ensure the credit unions' recordsare safely locked up and that precautions have been taken to avoidaccidental destruction by fire or flood in the manager's basement.Additionally, other members of the household might access thesedocuments, inadvertently or for nefarious reasons, in violation ofprivacy laws.

The NCUA proposal provides a two-year window upon approval of afinal rule to find a suitable location. In the meantime, creditunion managers are permitted to bring required documentation to amutually agreed upon public location, such as a restaurant or alibrary, which addresses the examiner safety issue, but createspossibly a greater information security risk from eavesdroppers ordropped documents.

In addition to providing federal credit unions ample time tomove their headquarters, the NCUA is also paying them to do it. Theagency plans to offer grant money to assist with location moves forsmall credit unions, as it did with the requirement for creditunions to file call reports electronically (which has not closedany credit unions to date). The Office of Small Credit UnionInitiatives has already contacted the 95 home-based credit unionsoffering viability assistance, which they have turned down. Thattells me the managers don't care for their credit unions tosurvive. The OSCUI also will offer guidance for affected creditunions.

This administration, while I have disagreed with much of theregulation in general, has done too much to assist certain creditunions that do not want to be saved. As mentioned previously, OSCUI“contacted” the 95 home-based credit unions. I used that word verydeliberately, because the NCUA had no other way of contacting someof these credit unions other than showing up at the door. The icingon this ridiculous cake is that the agency's proposal also wouldrequire that federal credit unions provide the NCUA and memberswith a phone number and email address for the credit union. Thinkabout that! The agency has to demand that members—and regulatorsfor that matter—be able to call or email the credit union.

The regulation spurred an email to me from a former examiner andcredit union regulator. The arguments presented were the same old“this is how we've always done it,” similar to BoardMember MichaelFryzel's comments at the board meeting. Credit unions alreadyhave been shown that that attitude won't keep the industry fromshrinking and membership continuing to grow more slowly than thepopulation growth, even after the post-Bank Transfer Day surge.

Board Member RickMetsger nailed it when called out these credit unions asmere savings clubs. And tracking down 95 of them ranging from$34,000 to $12 million in assets without contact information forsome of them is expensive for the regulator (and therefore creditunions) and useless to the membership.

My only problem with this particular reg is that it doesn'tapply to all federally insured credit unions (only 81 of the 95 arefederal).

If credit unions want to be taken more seriously by consumers,lawmakers and regulators, step up and act like professionalbusinesses. Quit playing house.

Sarah Snell Cooke is publisher and editor-in-chiefof Credit Union Times. She can be reached [email protected].