CUNA Regulatory Comment Call

December 13, 2001




In October 2000, the NCUA Board adopted an amendment to its FOM policy and manual that required federal community credit unions to spell out in their marketing plan, business plan or other separate document, how they planned to serve the entire community. The plan must have included how a community credit union would market its services to the community and what procedures and services would be offered to underserved individuals in the community. The Board acknowledged at the time the amendment was approved that there is no tangible evidence that credit unions are not serving their entire communities.

The interim final rule eliminates the CAP requirements for existing federal community credit unions. However, the interim final rule retains the requirements that a proposed community federal credit union (new and converting) develop a detailed and practical business and marketing plan to serve its entire community for at least the first two years of operation. The rule also reiterates that community credit unions will be expected to regularly review and to follow to the fullest extent economically possible, the marketing and business plan submitted with their application.

The interim final rule notes that the CAP requirement only applied to one type of federal credit union charter – community federal credit unions. The Supplementary Information accompanying the rule states that a majority of the Board now feels that because there is “no evidence credit unions are not attempting to serve their entire communities, it is not a reasonable regulatory practice” to apply the CAP requirement only to certain existing credit unions.

CUNA opposed the CAP when it was adopted last year and has since then strongly advocated the agency remove it before it takes effect. Our opposition is based on the following concerns:

Throughout their history, credit unions have been steadfast in their service to members, including low-income individuals. This long- standing commitment was reaffirmed in the Vision Statement on the Mission of Credit Unions in CUNA’s Renaissance Commission Report, as approved by CUNA’s Board in October. That statement acknowledges the unique role credit unions play in helping to insure members, including those who are economically disadvantaged, have fair access to financial services. It states in part:

Credit unions include service to people of modest means in their business activities because of the inherent dedication of not-for- profit, cooperative financial institutions to such service, the traditions and values of credit unions, and the commitment of boards of directors to credit union values.

Another set of changes in the interim final rule is the updating of the definition of “investment area” in Chapter 3 of the FOM manual. Under the interim rule,

would be added to the Manual as investment areas for purposes of permitting federal credit unions to add underserved communities.

A majority of the NCUA justified the adoption of the new rule as an interim final on the basis of the fact that the amendments further the public interest because of the recent and sudden increase in credit union asset growth and the current uncertainty in the economy; they also further the public interest by removing a potentially costly and unnecessary regulatory burden and promotes the efficient use of agency resources and staff. Regarding investment area, the interim final rule merely updates the definition of that term in the Manual.


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 •