Wednesday, February 24, 2016

FOM Policies, Just Not Reg Burden, Threaten Small CU Survival

In an opinion piece in The Hill, former Representative Jim Nussle, president and CEO of the Credit Union National Association (CUNA), wrote that regulatory burden is threatening the survival of small credit unions.

It is true that small credit unions, as well as small community banks, lack the economies of scale to spread out the cost of complying with all the new regulations and may cause these institutions not to be viable.

But regulatory burden is only part of the story.

Changes in field of membership (FOM) policies and practices that have fueled expansive community charters and permit anyone to join a credit union through an association have allowed large credit unions to poach smaller credit union members.

But this has not always been the case. Historically smaller credit unions received overlap protection with regard to their fields of membership. Overlap protection was designed to protect smaller credit unions operating in the same market as larger credit unions.

However, overlap protection has largely disappeared.

This is leading to increase competition between smaller and larger credit unions hastening the demise of small credit unions.

As Paul Harvey used to say, "And now you know the rest of the story."


  1. That's been the case for over 20 years and went into overdrive with HR1151 in 1998.
    What is noteworthy about your post is that you publicly point out what CUNA and Nafcu will never admit. The entire "movement" works against itself.
    The most disingenuous industry on the map.

  2. Dr. Leggett.
    You sell yourself short.
    Sometimes you aren't just the rest of the story, you're the only way we hear the story.
    My board and I discussed that the only good info we have gotten on medallion loan crisis is from your blog. And the numbers are scary. What does that total problem look like for potential losses and assessments and what does it say about NCUA 's supervisory skill that they let those credit unions concentrate over 70% of ASSETS in medallion loans?
    Also, if it wasn't for you, we would never know that NCUA tried to sneak to fdic calculation for insurance fund and that they want to raise the amount we pay in!
    Dr. Leggett, has our back!
    CUNA and Nafcu? Have their own backs.



The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.