Deborah Matz
Board Member
National Credit Union Administration
Statement on Chartering and Field of Membership
Final Rule
March 27, 2003

Mike, thank you for all the work you and the task force have done drafting this rule and for getting us to this point. You have had many meetings, discussed the proposal with the board and with outside parties, consulted with regional staff and carefully read and digested 670 comment letters. I appreciate the time you and the task force have devoted to this issue and the in-depth briefing you provided me.

As I mentioned at our November meeting, in traveling the nation visiting with credit union officials and volunteers, our restrictive FOM regulation has been the issue that I’ve heard most about from federally chartered credit unions. This rule goes a long way to addressing many of those criticisms by permitting more flexibility and expansiveness in determining fields of membership.

I am cognizant of the fact that the statute requires that a proposed community credit union must comprise “a local community, neighborhood, or rural district”. I have given a great deal of thought to the concept of “local community” and what that really means in the year 2003. I have concluded that times have changed and so has the concept of local community. Years ago this might have been the neighborhood in which one lived and worked – perhaps a few city blocks or a town. In this age of advanced communications, accessible public transportation and highway systems and regional shopping malls and business centers, the larger community charters permitted in this regulation are not, in my opinion, inconsistent with the statutory requirements.

Further, I have concluded that size, in and of itself, should not be a factor in determining the validity of a field of membership. It is a commitment to the credit union philosophy of people helping people. This is what credit unions are all about. I believe that one of the distinguishing characteristics of credit unions is the wide array of affordable financial services they offer: $200 loans to a family to prevent their electricity from being turned off; risk-based lending as an alternative to payday loans; branches in very-low-income neighborhoods; and world-class financial literacy programs. Under this rule, the size of a community is no longer the primary focus. Our attention would shift to the real issue – how the credit union would serve everyone in its field of membership.

Perhaps most importantly, larger fields of membership will permit more people to join a credit union and I think that is a really good thing. This proposal will permit credit unions to make their services available to some of the 56 million people who do not have accounts in insured financial institutions.

TIP is another important aspect of this proposal. It is an innovative idea that will provide an opportunity for a credit union to expand and diversify its field of membership while remaining a single common bond credit union. This could be a lifeline for some small credit unions, and for credit unions whose sponsors are in financial difficulties or are downsizing.

Likewise, in eliminating the 5 percent ownership interest in a shared service facility and in adding wholly owned ATMs to the definition of service facility for select group expansions, we are responding to concerns from some credit unions that the current regulation presents an obstacle to growth. We are, therefore, attempting to level the playing field so small credit unions will have more of an opportunity to compete in a competitive market.

I believe this rule is vitally important to credit unions of all sizes and configurations. It will help to maintain credit union diversity. Large and small credit unions; single and multiple common bond; associational, occupational and community charters all benefit from this rule change because it gives them more flexibility and more choices. In doing so, it will enhance the safety and soundness of the credit union movement. The beneficiaries will be the members and those who, as result of this new rule, will have access to an insured financial institution and the multitude of low-cost services that credit unions offer.

Mike, how is the FOM Taskforce going to monitor the implementation of this rule? In particular, how are you going to ensure the adequacy of business plans and marketing plans for community charters that do not come before the NCUA Board?

NOTE TO THE MEDIA:  More information about Board Member Matz is available at http://www.ncua.gov/org/ncua_board/matz.html, including text of speeches, news releases, full biography and appearance schedule.  Photos are available by contacting Molly Schar at 703-518-6338 or mschar@ncua.gov.