Legal opinion outlines ‘traits’ of associational common bond

March 21, 2016 -- If a group of potential credit union members are 50 years of age or older residing in a specific state, but share additional traits, it is possible that those additional traits would qualify that group for an associational common bond under a federal credit union charter, NCUA wrote in a recent legal opinion letter.

Responding late last month to a query from former American Bankers Association (ABA) Economist Keith Leggett (now teaching at a North Carolina college), agency General Counsel Mike McKenna wrote that “commonality of age and residency alone is not enough to establish a permissible FOM under NCUA’s regulations.” However, McKenna added that if the group “were also to share other commonalities in addition to age and residency, then it is possible that those additional commonalities could be sufficient to satisfy the associational common bond provisions of NCUA’s regulations, which specifically require a substantial degree of commonality.”

He added “We would need to know more details about those additional commonalities to determine if they are sufficient to satisfy the associational common bond requirements.”

NASCUS has posted on its website a brief analysis of the opinion letter (OGC 16-0117), available to association members only.

NASCUS analysis, NCUA legal opinion letter: Associational common bonds for FCUs (members only)
NCUA legal opinion letter OGC 16-0117