I've written several times about credit unions using associations to open their fields of membership to anyone.
However, there are several trends that I find very bothersome.
First, you have some credit unions that are allowing a person, who is otherwise ineligible to belong to the credit union, to join an association at the same time they are joining the credit union. In the Washington, D.C. area, there are numerous credit unions that are permitting this to take place, such as Pentagon Federal Credit Union, State Department Federal Credit Union, and Andrews Federal Credit Union.
This simultaneous affiliation with an association and a credit union undermines the spirit of the law. Congress in 1998 found that there needed to be "a meaningful affinity and bond among members, manifested by a commonality of routine interaction, shared and related work experiences, interests, or activities, or the maintenance of an otherwise well-understood sense of cohesion or identity."
It is hard to see how simultaneously joining an association to become a member of a credit union constitutes a meaningful affinity and bond among members.
At a minimum, shouldn't the person first belong to an association for some length of time -- maybe 6 months -- before the individual can apply for credit union membership? This would at least meet the requirement of commonality of routine interaction and interests.
Second, I am bothered by credit unions that are setting up their own associations, groups or foundations to qualify people for credit union membership.
For example, Allegacy FCU (Winston-Salem, NC) created The Center for Smart Financial Choices. For a life-time donation of $10 to The Center for Smart Financial Choices, you can become a member of Allegacy FCU.
Achieva Credit Union (Dunedin, FL) recently received regulatory approval to expand its field of membership to include dues paying members of the Achieva Foundation.
While the Achieva Foundation or The Center for Smart Financial Choices may engage in admirable activities, it is disturbing that these credit unions are using these associations to circumvent fields of membership limitations.
The rules governing associational common bonds should require at the minimum an arms length relationship between the association and the credit union.
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Should credit unions have to wait until an employee of a sponsor group be employed for six months before they are eligible to join the credit union? Be a member of a church for six months if the church is in the FOM (group or community)? Live in the community for six months before joining?
ReplyDeleteMe thinks the good Doctor protest too much.
Deep thoughts by Prof. L.
ReplyDeleteThere is no new member enforcement, but if you want to clarify the rules, knock yourself out.
ReplyDeleteKeith - I think you miss the point - particularly with Low-Income charters. If membership in a credit union encourages participation in associations - particularly ones that fight poverty, promote economic development, etc., then I don't really care what comes first - the chicken or the egg - the benefits are many and tangible.
ReplyDeleteAre these people actually participating in the association or are they just making a payment to be able to join a credit union?
ReplyDeleteThere is a big difference.