The federal credit union regulator is proposing to make it easier for credit unions to determine whether new and expanded charter applications have a good chance of being approved. Proposed requirements focus on who can be targeted for credit union membership.
The National Credit Union Administration is proposing to provide more clear guidance about who credit unions can target for membership when they are seeking a new charter or expanding.
The objective is to make it easy for applicants to determine whether they have a viable charter before dedicating resources to the application process. In addition, the NCUA will expend fewer resources reviewing and declining applications.
The regulator outlined three types of geographic areas that automatically qualify as a well-defined local community. The NCUA was empowered with determining such a community through the Credit Union Membership Access Act, which was passed by Congress in 1998.
The NCUA said that two important characteristics of a well-defined local community are “geographic certainty to the community’s boundaries” and “sufficient social and economic activity among enough community members to assure that a viable community exists.”
The first type of geographic area is a single political jurisdiction that is less than an entire state.
Next is a statistical area that is limited to 2.5 million people according to the Office of Management and Budget. This type would need to have a core area that satisfies a concentration threshold for employment and population.
“NCUA believes it continues to be prudent policy to consider single political jurisdictions and statistical areas, as those terms are described more fully below, as well-defined local communities because they meet reasonable objective and quantifiable standards,” the proposed rule states.
Also automatically qualifying are areas that were grandfathered.
