SUMMIT: Proposed rule on FOM likely by year’s end
OCT. 22, 2015 -- A proposed rule to modernize NCUA’s field of membership rules likely will be issued before year’s end, NCUA Board Vice Chairman Rick Metsger told the NASCUS Summit participants Thursday.
According to Metsger, the proposal (still under development but on the fast track) would place more control of a credit union’s FOM with its board of directors to deal with local marketplace challenges. Metsger said that “in about 80% of the cases brought to it, the agency can take action. “I believe we have broad authority to interpret the statute” with respect to FOM, he told the state credit union system group.
Metsger argued that action is needed by the federal regulatory agency because the trend of charter conversions has recently tilted in favor of state charters, particularly those states that allow broad credit union FOMs. “The federal charter is lagging way behind,” he said.
While not providing details, Metsger said the focus of the proposal would be to give credit unions a menu of options for determining their FOMs. The menu approach, he said, is intended to give credit unions choices that best fit their own needs.
In a follow-up panel discussion (featuring state and federal regulators, a legal expert and Metsger himself), the NCUA Board vice chairman explained that the choices would entail “a lot of different things to look at which would fit credit unions and their strategic needs.”
For example, one approach would be to grant credit unions an FOM that is based on their congressional district – which, in a limited number of states, covers the entire state.
During the panel discussion, Linda Jekel, Director of Credit Unions, Department of
Financial Institutions State of Washington, noted that her state has had statewide FOMs for the past two decades. Over that time, she said, she has seen no relationship between FOM expansions and safety and soundness. “Adding diverse FOMs is not a safety and soundness issue,” she said. “But it has been good for credit unions.”