CUNA Regulatory Comment Call

January 27, 2006

NCUA Chartering and FOM Manual Amendments Underserved Area Expansions and Service Facilities

Major Rule for Federal Credit Unions


Also, for comparison purposes, here is a link to NCUA’s current policy on serving underserved areas.


On November 2, 2005, the America Bankers Association filed suit in Utah to challenge the current policy of the National Credit Union Administration Board that permits all federal credit unions to add underserved areas to their fields of membership.

The bankers contend that because the Credit Union Membership Access Act only expressly authorizes multiple group credit unions to add undeserved areas that are outside of their fields of members, Congress meant to prohibit single group and community credit unions from adding underserved areas. Thus, they argue, NCUA’s policy, which also permits single group and community credit unions to add such areas, is not supported by the Federal Credit Union Act.

The agency is very concerned that the bankers’ litigation in Utah has created “a degree of uncertainty” – perhaps the understatement of the year – about whether single group and community credit unions may continue to add new underserved areas. The agency also said it is “concerned about the financial effect of continuing to approve new requests to serve underserved areas by non-multiple common-bond credit unions that then invest resources in serving these areas. We believe that is unfair to provide persons of limited means with needed financial services where the possibility exists that they could suddenly be deprived of those services.”

The agency said that since the moratorium was adopted in late December, it has conducted “a comprehensive review of its underserved area policy.” The review resulted in the amendments that the agency is proposing to its field of membership policy.

Here is a brief description of the amendments:

NCUA is seeking comments on the proposed changes and is requesting input on all aspects of its policy on service to the undeserved. In addition, it is seeking comments on the five specific questions below.

We really need your input on the proposal and any related concerns you care to raise. CUNA’s Federal Credit Union Subcommittee will be developing CUNA’s letter and your comments will be important to Subcommittee members as they consider CUNA’s position on the proposal.


  1. Does NCUA have authority to permit expansions into underserved areas for all three federal charter types (single common-bond, multiple common-bond, and community charter)?

    Please explain.

  2. Do you feel that NCUA should permit only multiple group credit unions to add underserved areas to their field of membership? What would be the impact of that limitation?

    Please explain.

  3. If only multiple common-bond credit unions are permitted to add underserved areas, should they be permitted to retain these areas in the event they change charter type?

    Yes ______ No ______

    Please explain.

  4. To what extent do non-multiple common-bond credit unions have existing investments in underserved areas? What types of investments are they? (For example, capital investment, loans, share deposits, and other programs targeting low income people.)

    Please explain.

  5. What would be the impact to members of underserved areas, and non-multiple common bond credit unions, of placing restrictions on the addition of new members in underserved areas they are currently serving?

    Please explain.

  6. Do you agree with the new provision requiring that a physical presence (service facility) be established in an added underserved area to ensure an active credit union role and better serve local residents?

    Yes ______ No ______

    If not, what other method should NCUA employ to ensure that the service needs of the local residents in the underserved area are adequately met?

  7. Other comments?

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Deputy General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Lilly Thomas • Assistant General Counsel • (202) 508-6733 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •