CUNA Comment Letter

CUNA Supports Interim Final Rule on FOM Changes

May 21, 2001

Ms. Becky Baker
Secretary to the Board
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314-3428

VIA Email to regcomments@ncua.gov

Dear Ms. Baker:

The Credit Union National Association (CUNA) is pleased to comment on the National Credit Union Administration Board’s Interim Final Rule With Request For Comments regarding changes in its policy contained in NCUA’s Chartering and Field of Membership Manual (Chartering Manual).

In March the Board adopted as an interim rule and proposed two changes in its Chartering Manual regarding the application process for federal community charters or expansions. One amendment would eliminate the requirement that applicants submit documentation to establish a community area if NCUA has already determined that the same area is well-defined local community, neighborhood or rural district. Another change would delete the example of "common characteristics and background of residents" from the list of acceptable documentation to demonstrate community. The NCUA Board has also delegated to the regional offices the authority to approve applications for new community charters and charter amendments when the Board has already determined that the community requirements for a particular geographic area have been met.

CUNA strongly supports these changes, which are wholly consistent with the agency’s new approach to regulation as embodied in the Reg-Flex program.

The first amendment relieves federal credit unions seeking community charters or charter changes from a substantial compliance burden when the agency has already determined that a community already exists. Because the requirement was duplicative and delayed the application process, we believe its deletion is appropriate. This change will help to improve the community chartering process, which can be costly for federal credit unions and take many months to complete.

However, the Supplementary Information indicates that NCUA may still require applicants to submit their own summary and other documents to show community if it has "reason to believe that the documents on file from previous applicants are no longer accurate or are insufficient." We urge the agency to provide further guidance on this matter and to address issues such as, what will "reason to believe" mean in practice; when would a credit union be informed that it needs to provide indicia that a community exists; if a credit union disagrees that a community has not changed, how does the agency envision the dispute will be resolved; and similar questions. Also, the mere passage of time should not be sufficient to require evidence of a community if the characteristics of the locale have not changed.

CUNA supports the deletion of the example of common characteristics because as NCUA states, neither it nor credit unions have found this criterion to be of value in the application process. The Supplementary Information indicates that "mere statistical data about religious beliefs, ethnicity, age or income may encourage questionable assumptions…." We do not agree with this observation in the context of community credit unions but support the agency’s deletion of this example on the grounds that it is not useful to credit unions or the agency.

While NCUA is not seeking comments on its delegation of authority, we likewise applaud this decision. It will enhance the process and should shorten the time frame for pending applications when a community charter or charter amendment is requested and NCUA has already determined that a community exists. This is an important delegation that will benefit federal credit unions, their members, and the agency.

In closing, we strongly encourage the agency to continue its efforts, which are fully consistent with the Credit Union Membership Access Act, to make additional improvements in the processes federal credit unions must follow when seeking charters and field of membership changes.

Sincerely,

Mary Mitchell Dunn
Associate General Counsel and Senior Vice President