NAFCU to NCUA: Association threshold is subjective

A provision in NCUA’s proposed rule on associational common bond – specifically, a threshold requirement to determine an association’s independence and purpose – seems unnecessary and subjective, NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt said Monday.

Hunt, in an official comment letter, thanked NCUA for its attention to the regulations for chartering and fields of membership and expressed NAFCU’s support for helping credit unions expand. However, she wrote, NAFCU is concerned about the threshold requirement the proposed rule would impose before the “totality of the circumstances” test in order to determine whether the association in question was formed for the purpose of expanding credit union membership. The threshold would require that the association have operated independently of the credit union for one year before the membership expansion application.

NAFCU also raised due process concerns with the ongoing quality assurance reviews being conducted by NCUA.

Hunt said NAFCU also supports the proposed addition of a review of corporate separateness to the “totality of the circumstances” test but questions whether associations should be required to have a physical presence outside the credit union’s building.

She added that NAFCU supports NCUA’s proposal to give automatic approval for certain associations and urged NCUA to maintain its current chartering policy without the addition of geographical limitations on associational common bonds.

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