Thursday, November 5, 2009

Common Bond Is A Donation

Several weeks ago, Bruen Credit Union Blog did a post What Field of Membership?

The post wrote that the common bond for Pentagon FCU is a $20 bill.

For $20 you can join National Military Family Association (NMFA) and immediately become eligible for membership at Pentagon FCU. Pentagon FCU makes it clear that continued membership in the National Military Family Association is not a requirement to remain a member of the Pentagon FCU.

In fact, one of my golfing buddies joined the NMFA in order to get a Pentagon FCU credit card.

NCUA’s regulations permit associational common bonds and some credit unions, such as Digital FCU, have been using associational groups as a strategy to effectively circumvent field of membership limitations.

It’s legal, but is it right?

Now some credit unions or credit union trade associations appear to be organizing associational groups for the primary purpose of allowing people to join the credit union.

For example, United Services of America FCU in San Diego allows people to join the credit union by becoming a member of Prime Meridian Association. For information on Prime Meridian people are advised to contact the credit union.

The creation of Prime Meridian Association fulfills a vision articulated by Mary Cunningham, the CEO of United Services of America FCU.

She wrote several years ago: “I believe that every red-blooded person living in America deserves the right to join a credit union, regardless of where they live or who their employer is or what language they speak…I believe the common bond is formed when a person walks into a credit union and lays down their $5 to join a credit union along with all the other members using it.”

GTE FCU has set up CU Savers, a non-profit educational club the credit union sponsors. By joining CU Savers, a person is eligible for membership in GTE FCU.

The formation of an association for the purpose of allowing people to join the credit union is an abuse of the credit union charter and a blatant manipulation of the system.
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