COMMENT: NCUA proposed rule - associational common bond amendment
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When: 6/30/2014
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NCUA Board proposes rule regarding associational common bond grounds for membership

The Board unanimously approved a proposed rule (Part 701) to clarify which associational groups do and do not qualify for membership of a federal credit union.  Chairman Matz indicated in the meeting that several federal credit unions with associational groups were advertising that membership was open to anyone late last summer, which prompted the NCUA to issue Letter 13-FCU-03, “Potential Violations of Common Bond Advertising Requirements.” The proposed rule would:

  • Expressly prohibit, as a threshold requirement, an association from being formed primarily for expanding a federal credit union’s membership;
  • Expand the criteria of the test on totality of the circumstances, which determines if an association satisfies the associational common bond requirements and qualifies for inclusion in the federal credit union’s field of membership;
  • Grant automatic qualification under the associational common bond rules to certain categories of groups NCUA has approved in the past, such as scouting groups, labor unions, electrical cooperatives, churches, ethnic organizations, and homeowners and alumni associations;
NCUA noted that associational groups may be grandfathered, but that it would consider if any associations in a credit union’s field of membership needed to be removed. The proposed rule can be found on NCUA’s website.  Comments on the proposed rule are due 60 days after publication in the Federal Register, which is expected shortly.  

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