CUNA Regulatory Comment Call

November 19, 1999

Incidental Powers Of Federal Credit Unions



For more information about the advance notice, feel free to contact CUNA Associate General Counsel Mary Dunn at or Assistant General Counsel Michelle Profit at A copy of the published proposal will be attached to this document as soon as it is available from NCUA.

Details of the Proposal

Incidental powers of federal credit unions are regulated under 12 CFR 721, which addresses group purchasing activities. Under such activities, federal credit unions may make products or services of third party vendors available to their members. Except for insurance, a federal credit union is limited to reimbursement only for its costs associated with making products available through group purchasing plans.

NCUA's interpretations regarding incidental powers are currently based on whether such activities meet the test established in the case, Arnold Tours, Inc. v. Camp, which articulated the standards for national bank incidental powers. However, several more recent cases have expanded the concept of what is an acceptable incidental power for national banks.

NCUA's review of this area is long overdue as some of the cases expanding incidental powers for banks are more than 10 years old. Also, the Office of the Comptroller of the Currency, which supervises national banks, developed a broader definition of incidental powers in November 1997. The OCC uses the following criteria to determine whether an activity is permissible as an incidental power:

In light of the court cases and OCC's view, NCUA is considering restructuring its regulations into four sections:

Questions to Consider

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