Commonality of Age Is Not A Permissible Common Bond

The National Credit Union Administration (NCUA) in a February 25, 2016 legal opinion letter wrote that a group's commonality of age and residency alone is not enough to establish a permissible field of membership (FOM) under NCUA's regulation.

This letter was in response to my letter of January 28, 2016.

Specifically, I wrote NCUA seeking a legal opinion about whether a federal credit union's field of membership may be based upon a common bond that is comprised of persons who are age 50 years or older residing in a specific state.

NCUA did note that if the group shared other commonalities in addition to age and residency, it could be possible for a credit union to satisfy the requirements for an associational common bond.

NCUA further indicated in the letter that it was not aware of any federal credit unions operating with a common bond posed by this question.

I found this response to be surprising.

I wrote NCUA almost one year ago about U.S. Eagle Federal Credit Union (Albuquerque, NM). The credit union listed among its common bonds people who are 50 years of age or better and residents of New Mexico (Check out my March 27, 2015 blog). As of February 29, 2016, U.S. Eagle still reports on its website that one way to join is by being 50 years of age or better and a resident of New Mexico.

It seems to me that 50 years of age or better does not meet NCUA's associational common bond requirements.

This would indicate that this common bond is impermissible and needs to be shut down.

NCUA should penalize this credit union for its illegally adding people through this impermissible common bond.

Finally, the agency should hold accountable those staffers in the Office of Consumer Protection that permitted this impermissible common bond to persist for more almost one year after it was brought to their attention.

Letter is below.