Credit Unions Push for Field of Membership Expansion as NCUA Considers Final Rule

As the NCUA board is preparing to adopt a revised Field of Membership rule following a recent U.S. Supreme Court decision, credit union trade groups are asking agency officials to give credit unions greater freedom to expand.

National Association of Federally-Insured Credit Unions President/CEO B. Dan Berger asked the agency to reinstate field of membership guidelines for credit unions that were hurt by a lower court decision outlawing part of the FOM rule. “To streamline the chartering process, the NCUA should provide for a blanket reinstatement of any FOM statements removed due to the litigation,” Berger wrote in a letter this week to NCUA Chairman Rodney Hood.

Credit Union National Association President/CEO Jim Nussle went further, questioning whether there should be any limits on credit union fields of membership. “Field of membership has gone the way of the horse and buggy when it comes to assessing whether a borrower has the wherewithal to pay his or her debt,” he wrote in an op-ed in Credit Union Journal.

Hood announced last week on Twitter that the board will consider a final Field of Membership rule at its July 31 meeting.  

The original U.S. district court ruling in the American Bankers Association suit voided sections of the membership rule. The appeals court overturned that decision. The Supreme Court refused to review the appeals court decision. As a result, the two sections that were the basis of the challenge may be implemented.

One section automatically qualified a Combined Statistical Area or a contiguous portion with fewer than 2.5 million people as a local community. Another section increased the maximum population for a rural district to one million people.

Berger said that some credit unions were harmed when the agency “stripped” certain field of membership statements.

In his op-ed, Nussle wrote, “Credit union field of membership restrictions are exclusionary, and eliminating them would be a major step toward promoting financial inclusion and financial well-being while also enhancing credit union safety and soundness.”

On the other hand, banking trade groups have said they were disappointed by the Supreme Court decision and have been asking Congress to ensure that credit unions are subject to strict field of membership requirements if the lending institutions are going to keep their federal income tax exemption.


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