We believe that in order for credit unions to compete in a 21st century economy, the federal charter must keep pace with changes in state laws, technology, and the financial services industry. While we acknowledge that legislation is necessary to relax aspects of the Federal Credit Union Act's limitations on chartering, we firmly believe the NCUA can enact constructive regulatory relief by streamlining its chartering and FOM procedures, as well as removing all non-statutory constraints on FOM chartering and expansion.
Strengthening the federal charter and pursuing regulatory relief for federal credit unions is at the core of NAFCU's advocacy efforts. NAFCU fundamentally believes that the credit union industry's dual chartering system works best when the state and federal charters keep pace with each other. Several states, however, have been much more progressive in modernizing their credit union FOM rules to recognize today's dynamic and ubiquitous marketplace. As a result, the industry has seen multiple credit unions convert to state charters in recent years because of their inability to grow under the federal charter.
NAFCU's official comment letter submitted to the NCUA in February 2016 emphasized our strong belief that more can and should be done to bring the credit union industry into the 21st century, including:
- Eliminate or increase the core-based statistical area population (CBSA);
- Add a de novo narrative approach to the statistical methods used to classify "well-defined local communities;"
- Either remove the service facility requirement for multiple-common-bond charters or allow credit union online services to demonstrate their presence in underserved areas;
- Recognize retired federal employees and retired teachers as affinity groups;
- Allow single- or multi-associational chartered federal credit unions that convert to community charters to continue to serve their previous associational and occupational groups;
- Consider ways to more efficiently authorize mergers;
- Adopt a maximum 30-day window for the Office of Consumer Protection to review FOM amendment requests; and
- Establish a formal notification process when reviewing credit unions' FOM-related applications so credit unions can have regular status updates.