Compliance Blog

Dec 28, 2015
Categories: Board and Governance

FOM-Calling All Credit Unions, pt 3

Written by Alicia Nealon, Director of Regulatory Affairs

Happy Holidays! I hope the compliance community is still in the throes of family, friends and leftovers. But for those of you stealing a second away from the holiday chaos, what better way to take a mental break than to chat about FOM. So with that, welcome back to the third installment of our series of posts where NAFCU's Compliance Blog will break down different portions of NCUA's FOM proposal and highlight the key issues that we are looking for your feedback on. Last week, we discussed Multiple Common Bond Charters. Today, we are going to review the Trade, Industry, or Profession common bond charter, or more commonly referred to as a TIP charter.

NCUA is proposing to clarify its definition of a TIP to include employees of vendors, suppliers, and contractors that have a strong dependency relationship on and work directly with other entities within the same industry. The proposal explains that a credit union would need to demonstrate that an entity is:

  1. Strongly dependent on the others within a TIP, and
  2. Shares a narrow commonality.

The existence of a strongly dependent relationship would hinge on the likelihood of a significant economic impact, on either or both parties, if one party were unable to continue operations without doing business with the other party.

To illustrate how this amendment would play out if finalized, the NCUA Board offered federal credit unions that serve the Air Transportation industry as an example. In the preamble to the proposal, the NCUA Board explains that:

A FCU that serves employees of companies within the airline industry that have a strong dependency relationship with airlines or airports, and whose employees work directly with providers of air freight transportation, courier services, air passenger services, in-flight food services, airport security, baggage handling, and commercial janitorial, maintenance and repair services. The premise of a strong relationship between these providers and their airport and airline customers is the likelihood of a significant economic impact, if not equally between them, if one were unable to continue in its operations without doing business with the other.

What do the TIP charters think? Would this tweaks provide you all the relief that you need in this marketplace? Does your credit union anticipate utilizing this amendment? Are there any other changes to TIP charter requirements that NCUA should consider that have not been addressed in the proposal?

As you consider these questions, be sure to take a look at NAFCU's Regulatory Alert 15-EA-20, our Field of Membership Issue Page, or reach out to me directly (, 703-842-2266) with your thoughts.