New NCUA Field of Membership Rule Effective Next Month

The National Credit Union Administration on Oct. 14 will begin considering applications from credit unions that wish to seek a community charter under its expanded Field of Membership rule, NCUA Chairman Rodney Hood said this week.

In a letter to credit unions, Hood said the changes will allow a credit union applying for a community charter or an expansion or conversion of one to use a Combined Statistical Area or a contiguous portion of one as a “well-defined local community” in their field of membership. To qualify, the area must have a population of 2.5 million people or less.

The credit union would not be required to demonstrate that prospective members share a common interest or connection, Hood wrote.

The rule also requires that an applicant provide the NCUA with the business rationale used to define the area if it does not include the area’s largest county or city.

“The new provision ensures federal credit unions avoid potentially discriminatory practices when establishing a proposed service area,” Hood wrote.

In June, the U.S. Supreme Court refused to hear an appeal by the American Bankers Association challenging the NCUA’s revised Field of Membership rule. The ABA had filed suit charging that the agency did not have the power to expand the rule and that it would have essentially allowed credit unions to “redline” low-income areas out of their fields of membership.

“The Board’s approval of this final rule will facilitate greater access to safe and affordable financial services for all Americans,” Hood wrote.


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