NCUA Proposal Could Permit Seven State-wide FOMs

The National Credit Union Administration (NCUA) Board on November 19 issued a proposed rule for comment that would permit state-wide fields of membership (FOM) for seven states.

First, the NCUA Board is proposing that a Congressional District can constitute a well-defined local community. This represents a reversal of NCUA's previous position that a Congressional District did not meet the requirement of being a well-defined local community.

There are seven states represented by a single at large Congressional District. The seven states with a single at large Congressional District are: Alaska, Delaware, Montana, North Dakota, South Dakota, Vermont, and Wyoming. In addition, the District of Columbia and several U.S. territories would qualify as a well-defined local community.

However, I don't see how an at large state-wide Congressional District is local and demonstrates a commonality of interest or interaction among members. In fact, NCUA's FOM and Chartering Manual notes that a state does not meet the requirement of being local.

Second, the NCUA Board is proposing to expand the population size of a rural district. The Board is raising the population threshold from 250,000 to 1 million. The other requirement is that a rural district is sparsely populated -- no more than 100 people per square mile.

Currently, the states of Alaska, North Dakota, South Dakota, Vermont, and Wyoming have low population densities and are under the 1 million population threshold requirement. However, more than half of the residents in the states of Alaska, North Dakota, South Dakota, and Wyoming live in urban areas.

So, how can a whole state be treated as a rural district when more than half of the state's population lives in urban areas?

I will provide additional comments on other areas of this proposed rule over the next month.

Read the proposed rule.