Field of membership remains the limiting factor for credit unions seeking to expand, and the bank lobby has won another victory in keeping it that way

Sam Brownell


May 14



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Sam Brownell

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Sam Brownell

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Field of membership is credit unions’ albatross, and while the current administration made some changes in the right direction to help credit unions expand and serve more members, the bankers have beaten some of those advancements back…again.

NCUA Forced to Backtrack after Latest Hurdle in Ongoing Saga

Non-newbies to the credit union market will recall that the bankers successfully sued credit unions in the past, which precipitated the passage of the Credit Union Membership Access Act. (As an aside, current Chief Justice John Roberts represented credit unions in that case before the Supreme Court; it was one of his very few losses.) When the NCUA tried to expand FOM community charter rules in the mid 2000s, a handful of Utah and Pennsylvania credit unions were stripped of newly minted expansions. The NCUA then attempted to circumvent the ruling with the credit unions resubmitting the additions as underserved areas, which also failed

Regulators (and the regulated for that matter) feel a sharp sting when referred to in a legal case as “arbitrary and capricious,” nevertheless they have been at it again, seeking ways to expand field of membership definitions within the spirit of the law. 

Your credit union can use CUCollaborate’s FOM analysis tools to identify opportunities for expansion. Yes, they’ve been updated since the recent setback!

While the 1934 Federal Credit Union Act definition of community has not kept up with the times, credit unions don’t seem to be getting any breaks (although bankers might argue they receive tax breaks). If credit unions were ever taxed in exchange for many of the authorities banks have, such as expanded business lending and further broadening field of membership constraints, community bankers should be wary of what they’re seeking! But I digress…

When the NCUA published its final rule in October of 2016 (Federal Register posting here), it, “consistent with the limitations of the Federal Credit Union Act:”

  •      Allowed greater flexibility to community charter credit unions in how they define the local communities they serve;
  •      Provided credit unions with better opportunities to serve underserved areas by updating the process for defining those areas;
  •      Enhanced access to credit union services for residents of rural areas by allowing rural district credit unions to serve up to 1 million people;
  •      Streamlined paperwork for multiple common-bond credit unions that seek to serve additional groups, such as including independent contractors with a strong dependency relationship with an employee group; and
  •      Expanded credit union access for honorably discharged members of the armed services by allowing them to join credit unions serving their active-duty counterparts.

The rule also modified the type and extent of information that a federal credit union must submit to support an application to expand its field of membership.

Click for a video of CUCollaborate Founder Sam Brownell’s JoinCU elevator pitch before his demo at FinovateSpring18! JoinCU helps consumers find credit unions, solving eligibility issues.

According to, U.S. District Judge Dabney Friedrich nullified provisions of the NCUA’s new field of membership rule that increased the population limit for rural districts to one million residents and automatic qualification of a combined statistical area or a contiguous portion of it with fewer than 2.5 million people as a local community. The NCUA said it is still considering its options to appeal, and 42 credit unions are affected by the decision but won’t have to remove members gained as a result of the now-defunct regulation.

Credit unions might not be having this level of trouble to expand their field of membership if they re-engaged their members as owners. Owners care about their businesses and investments in them. Credit unions are not going to be able to change the nearly century-old law without the kind of member support they were able to garner with CUMAA, and even then, the win was questionable to some. Greater consumer—aka voting constituent—support means credit unions would be more likely to modernize regulations for the modern financial services world.

Field of Membership Expansion

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