If the underserved area point that everyone is making sounds familiar, that's because the NCUA passed a more restrictive policy, allowing only multiple common bond credit unions to add underserved areas following the American Bankers Association's 2005 legal challenge to a community charter adding underserved areas. This attempt came after a previous legal challenge reversed the NCUA's approval of a six-county FOM for the same credit union; the NCUA declined to fight the second challenge.

Following Metsger's letter, Tom O'Shea, president/CEO of the now $173 million Aspire Federal Credit Union in Clark, N.J., wrote a well-reasoned letter in response, copying the entire NCUA board and me. “There is far too much risk in the limited FOM options available to our credit unions in today's volatile economic times,” he wrote. FOM is antiquated in the face of modern technology, branches are expensive operations that cannot be economically justified though required by regulation, and it creates concentration risk. He advocated that FOM rules be as liberal as possible, and, “Let the member decide if the credit union they are considering joining meets their service needs.”

Novel concept.

O'Shea said Aspire already has three associations within its FOM, but adding them is becoming increasingly difficult. The credit union has even been asked to submit the financials of the association, which is not required for a select employee group.

Jim Blaine, president/CEO of the $29 billion State Employees' Credit Union in Raleigh, N.C., is less convinced that FOM is a true limitation. Serve your niche, and you can't go wrong. True, and even easier to say when the credit union's niche is an entire growing state, but Aspire's niche is technology-savvy members within its FOM. Is that less of a common bond than living in a certain county? Could my high school alumni Facebook page be a more meaningful community than my county? How can “local” from the Federal Credit Union Act be re-interpreted?

According to credit union consulting firm Dollar Associates, the NCUA's 25-mile reasonable proximity interpretation is just that—the agency's interpretation that could use an update. However, the only update the agency has considered of late is the rule from last April to crack down on a few envelope pushers that are forming associations as an FOM end run, which of course will punish every credit union looking to expand through associations, which is permitted by law. And, if enough cannot be accomplished within CUMAA, then the fight needs to be taken—with the NCUA's assistance—to the Hill.

Sarah Snell Cooke is publisher and editor-in-chief of CU Times. She can be reached at [email protected].