Narrative Approach Cannot Be Used to Do End-Run Around Court Decision

The National Credit Union Administration (NCUA) stated that federal credit unions cannot use the newly approved narrative approach to regain broad field of memberships vacated by the March 2018 federal court decision.

NCUA acknowledged that a number of federal credit unions took advantage of the expanded rural district and combined statistical area (CSA) parameters permitted by the agency's 2016 amendment to its field of membership rule.

As a result of the court decision, those federal credit unions are no longer permitted to utilize those broad fields of membership.

During the June 21, 2018 open board meeting, Frank Kressman, NCUA Associate General Counsel, stated that it is not possible for federal credit unions to use the narrative approach to do an end-run around the court order.

Kressman said the following:

"No credit union can use the narrative approach to regain the expanded fields of membership they had or expanded rural districts or CSAs. The reason for that, is that the narrative approach only applies to well-defined local communities that are based on commonality of interest and interaction among the residents."

Kressman concluded by saying "[t]here are no provisions in the narrative approach for rural districts or CSAs."

In other words, neither a rural district nor a CSA is a well-defined local community and cannot use the narrative approach to regain their broad fields of membership.