Associational
Common Bond and Field of Membership Requirements

CUNA Summary

The NCUA Board has issued a notice of proposed rulemaking (NPRM) to amend the agency’s chartering and field of membership (FOM) rules regarding associational common bond requirements.

· The proposal would establish an express prohibition that an association cannot be formed primarily for the purpose of expanding credit union membership.

· The proposal would expand the criteria in the “totality of the circumstances” test, which is used to determine if an association meets NCUA’s requirements. Under the proposal, alumni associations, religious organizations (including churches), homeowner associations, scouting groups, electric cooperatives, and labor unions, could be automatically included in an FCU’s FOM as long as such groups meet service area and other related requirements.

· Additionally, NCUA proposes to allow automatic approval for associations that have a “mission based on preserving or furthering the culture of a particular national or ethnic origin.” NCUA seeks input on other categories of associations that should receive automatic approval.

NCUA proposes to grandfather existing members from all qualified associations that are currently part of an FCU’s membership.

In response to complaints, NCUA will consider if there are associations in an FCU’s FOM that need to be removed, because they no longer meet the totality of circumstances test on a case-by-case basis. The intent of this provision is to make sure “associations” that do not meet NCUA’s requirements are not the basis for credit union membership. However, we will be focusing on this provision’s impact on associations that do meet the requirements and pressing NCUA to make sure the language in the final rule achieves the agency’s objective without limiting legitimate organizations.

NCUA is accepting public comments for 60 days following publication of the proposal in the Federal Register.

Please submit comments to CUNA by June 23, 2014. NCUA is accepting comments until June 30, 2014. If commenting directly to NCUA, comments should be addressed to Gerard Poliquin, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428.

For more information about this proposed rule, contact CUNA Deputy General Counsel Mary Dunn or Assistant General Counsel Lance Noggle

Click here for the proposed rule in the Federal Register.