NCUA's Take on Reasonable Proximity Should Reflect the 21st Century

NCUA Chairman Debbie Matz recently announced at CUNA’s GAC that 2015 will be the year of regulatory relief. This, coupled with strong statements from Vice Chairman Rick Metsger and Board Member Mark McWatters on the need for field-of-membership overhaul, along with the announcement of an NCUA field-of-membership task force, provides some hope that meaningful regulatory reform may be on the horizon for the industry. The news is welcomed, and frankly, has been a long time coming.

FOM Policy Needs Modernizing

While there are a number of key areas where reform is desperately needed in NCUA’s current field-of-membership policy, one item particularly in need of a long-overdue modernization is NCUA’s current 25-mile interpretation of a broad statutory requirement that states: Whenever practicable and consistent within reasonable standards of safety and soundness, a multiple common bond credit union should be within “reasonable proximity” to any SEG it seeks to serve. In meeting this requirement, the agency has historically taken a one-size-fits-all approach and focused all of its attention on the physical proximity the SEG or association has to a credit union branch. However, this approach is one-dimensional and fails to recognize the latitude afforded by the agency in the statute to consider other practical considerations that are still consistent, if not more consistent, with the safe and sound operation of a credit union.