NEW ORLEANS–A proposed rule to modernize NCUA’s field of membership rules likely will be issued before year’s end, NCUA Board Vice Chairman Rick Metsger told the NASCUS Summit here.
According to Metsger, who has championed field of membership reform since joining the board, the proposal that is under development but on a fast track in the agency would place more control of a credit union’s FOM with its board of directors to deal with local marketplace challenges.
Metsger said that “in about 80% of the cases brought to it, the agency can take action. I believe we have broad authority to interpret the statute” with respect to FOM, he said.
Metsger argued that action is needed by the federal regulatory agency, because the trend of charter conversions has recently tilted in favor of state charters, particularly in those states that allow broad credit union FOMs. “The federal charter is lagging way behind,” he said.
While not providing details, Metsger said the focus of the proposal would be to give credit unions a menu of options for determining their fields of membership. The menu approach, he said, is intended to give credit unions choices that best fit their own needs.
Later at the meeting, during a follow-up panel discussion that featured both state and federal regulators, a legal expert, and Metsger himself, the NCUA Board vice chairman explained that the choices would entail “a lot of different things to look at which would fit credit unions and their strategic needs.”
Among those different things: one approach would be to grant credit unions an FOM that is based on their congressional district, which in a limited number of states covers the entire state.
During the panel discussion, Linda Jekel, Director of Credit Unions, Department of Financial Institutions for the State of Washington, noted that her state has had statewide FOMs for the past two decades. Over that time, she said, she has seen no relationship between FOM expansions and safety and soundness.
“Adding diverse FOMs is not a safety and soundness issue,” she said. “But it has been good for credit unions.”