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ICBA: Credit Union Proposal Would Render Membership Restrictions Meaningless

Dec 12, 2016


Washington, D.C. (Dec. 12, 2016)—The Independent Community Bankers of America® (ICBA) today expressed its strong opposition to a National Credit Union Administration proposal to further decimate field-of-membership (FOM) rules for federally chartered credit unions. In a comment letter to the NCUA, ICBA said quadrupling the population limit for most community credit unions to 10 million violates statutory requirements that geographic-based credit unions may serve only a well-defined, local area.

“NCUA’s most recent FOM proposal to raise the population limits for most community credit unions to 10 million violates the intent and the plain language of the Federal Credit Union Act,” ICBA Executive Vice President and Senior Regulatory Counsel Christopher Cole wrote. “Together with the final FOM rule that was approved last October, these changes would further erode any meaningful distinction between tax-exempt credit unions and taxpaying community banks, thereby further undermining any justification for credit unions to remain tax-exempt.”

If the NCUA’s proposal is adopted, federal credit unions would be able to serve a statistical area with a population that is greater than the population of 41 states and the District of Columbia—making a mockery of statutory membership restrictions. Further, the NCUA’s proposal to allow community charter applicants to submit narratives to demonstrate residents’ common interests is troubling because the agency has proven that it cannot be objective when it comes to credit union expansion, ICBA wrote.

The comment letter comes amid ICBA and American Bankers Association lawsuits against the agency’s member-business-lending and FOM regulations, respectively. ICBA’s suit charges that an NCUA final rule would allow tax-exempt credit unions to exceed limitations on commercial lending activity, while the ABA argues that a separate FOM rule ignores statutory requirements on membership. Each association is planning to submit a friend-of-the-court brief in support of the other’s lawsuit.

“Enough is enough,” ICBA President and CEO Cam Fine said as ICBA last week declared support for the ABA suit. “No longer should the NCUA be allowed to stretch the law beyond its breaking point to serve as the tax-exempt credit union industry’s regulatory rubber stamp.”

About ICBA
The Independent Community Bankers of America®, the nation’s voice for nearly 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit