Credit union group aims to limit expansions

The National Credit Union Administration on Thursday proposed changes affecting its chartering policy, changes it called "protective."

The American Bankers Association, meanwhile, called the proposal "a small step in the right direction" but said it neither fulfills the intent of the law nor the mission of credit unions.

The proposed changes, largely in response to lawsuits filed by the American and Utah bankers associations, would limit underserved area expansions to multiple common bond credit unions and revise underserved area service facility requirements.

In November 2005, the bankers associations filed a lawsuit challenging the NCUA's actions permitting Utah credit unions — including the state's largest, Ogden-based America First Credit Union — to vastly expand their fields of membership. In the suit, the bankers argued that the NCUA had started allowing all credit unions to add more geographic areas to their fields of membership — without regard to location or charter — communities that are defined as "underserved areas" in the Federal Credit Union Act. As such, bankers claimed they were subject to unfair competition.

The following month, the NCUA issued a moratorium, suspending that part of its chartering policy that allowed certain credit unions (those with "single common bond" and community charters) to add new underserved areas. The moratorium is still in place. Over the past month, the NCUA said it reviewed its policies. On Thursday it announced its proposed changes. They are:

• To limit expansions into "underserved areas" to credit unions with multiple common bond charters — those which include, without regard to location, "communities" of members.

• To revise its "underserved area" service facility requirements, to ensure that a credit union has a "physical presence" in the area. The NCUA said that would "further encourage a very active role by the credit union in the underserved area."

The NCUA has opened a 60-day comment period on the proposed changes. For more information on the proposals, visit the NCUA Web site at www.ncua.gov. Comments may be submitted via e-mail at regcomments@ncua.gov.

In a statement released to the Deseret Morning News, NCUA chairwoman JoAnn Johnson said the proposed amendments were being issued "in the best interests of credit unions and their members."