In addition, the proposed rule stated that when an area is subdivided into metropolitan divisions, the board would permit a credit union to designate a portion of the area as its community.

Credit union trade groups praised the rule when it was proposed. The rule would "provide the requisite tools for our members to provide even more financial services to the consumers that need them the most," NAFCU President/CEO B. Dan Berger, said in a letter submitted to the NCUA.

Berger also asked the board to periodically review the population cap.

He asked for some clarification of the proposal, asking whether a narrative application would be given the same weight as other applications and whether credit unions would be able to request a formal explanation of any problems in a rejected application.

He also said that the agency has the power to remove any population cap.

JCUNA supports elimination of the population cap, wrote J. Lance Noggle, the trade group's senior director of advocacy and counsel. However, he added that the 10 million level would provide sufficient flexibility for most credit unions.

He said the narrative model is essential.

"It is especially important for NCUA to implement the narrative model because defining a community by political subdivision or statistical area alone may be an inaccurate representation of a community and could arbitrarily split access to membership of a credit union," he wrote.

However, banking groups, in comments submitted to the agency, said the rules would violate federal law.

"Since the NCUA has proven time and time again that it cannot be objective when it comes to credit union expansion, ICBA is concerned that the agency will use the narrative application process to rubber stamp any application for a new, expanded or converted community credit union," wrote Christopher Cole, executive vice president and senior regulatory counsel at the Independent Community Bankers of America.

And he said the NCUA board is not an objective regulator and is likely to approve any application that contains a narrative explanation.

The American Bankers Association said the rule would violate federal law.

"The reimagined definitions [eviscerate] the major limitations placed on credit union field of membership expansion and would allow nearly any federal community credit union to serve almost any geographic area or population center it desires," wrote Brittany Kleinpaste, the ABA's director of economic and policy research.

She added that the proposal "sidesteps" the Federal Credit Union Act in an effort to foster industry growth.

The banker reaction is particularly noteworthy since they filed a legal challenge to the last changes to the Field of Membership rule. A portion of that proposal was ruled illegal by a federal judge, while other parts were allowed to go into effect.

Banker groups and the NCUA are appealing that ruling.

Also, at the June 21 meeting, the board will consider a final rule governing voluntary mergers.

As proposed last year, the rule would require disclosure of all merger-related financial arrangements for some officials, increase the minimum member notice period and provide ways to allow member-to-member communications about the merger.

Credit union groups said the new rules are unnecessary.

"The Leagues believe the current merger rules, combined with NCUA's authority to specify other requirements on a case-by-case basis, are sufficient," said Sharon Lindeman, vice president of regulatory affairs at the California and Nevada Credit Union Leagues.

Credit unions are concerned that the proposal creates "inappropriate opportunities" for individuals to be involved in credit union business decisions, said Paul Gentile, president/CEO of the Cooperative Credit Union Association.

"A merger decision, which is often very difficult to make, is done in the best interest of the members," he said. "Any procedure which would lengthen the time it takes to facilitate and complete a merger should not be adopted. "