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NCUA Board Member Todd M. Harper Statement on Shared Service Facilities/Field of Membership Proposed Rule

December 2020
NCUA Board Member Todd M. Harper Statement on Shared Service Facilities/Field of Membership Proposed Rule

As Prepared for Delivery on December 17, 2020

Thank you, Elizabeth, for your presentation on this proposed rule to expand the field of membership for multiple common-bond credit unions and the request for comment on whether a credit union’s website and mobile banking applications should be considered a service facility.

Although I support expanding access to affordable financial services for people of modest means and diverse backgrounds, I cannot support this proposal. In my view, this proposed rule and request for comment do not conform with either the letter or the spirit of the Federal Credit Union Act.

One of the Act’s several requirements for adding a group to a multiple common-bond federal credit union is that the credit union must be “within reasonable proximity to the location of the group whenever practicable and consistent with reasonable standards for the safe and sound operation of the credit union.”1 The Chartering Manual interprets the term “reasonable proximity” as requiring the group to be “within reasonable geographic proximity” of the credit union. The Chartering Manual then explains this means that the group “must be within the service area of one of the credit union’s service facilities.”2 

Among the Act’s requirements for adding an underserved area to a multiple common-bond federal credit union is that “the credit union establishes and maintains an office or facility” in the underserved area.3 The Chartering Manual implements this provision of the Act by requiring a credit union adding an underserved area to its field of membership to “establish within two years, and maintain, an office or service facility in the community.”4 

Under this proposal, the service facility includes a shared branch or a shared branch network location, including a shared ATM or other electronic facility, if a credit union participates in a shared branching network, while removing the ownership requirement. I do not find that a leased ATM, among other proposed structures, creates a sufficient field of membership nexus under the Federal Credit Union Act. 

What is more, a leased ATM would not serve the needs of an under-resourced community well. The residents of these communities often prefer, and need, more personalized service.

This proposal also requests comment on whether a credit union’s transactional website and mobile banking applications should be included in the definition of a service facility. The agency first considered this issue in 2015 and opted not to move forward. Construing “reasonable proximity” to include internet access could render the Federal Credit Union Act requirement a near nullity.

Because the internet is widely available, this broader interpretation would allow field of membership expansion, subject to safety and soundness, to anywhere except rural or remote areas without internet access or wireless service. I do not believe that this is what Congress envisioned, and I do not believe that credit union members will be well-served by this approach.

Finally, I do not support a 30-day comment period for this proposed rule or any of the other proposals that we will consider today. The legal and public policy issues raised by this proposal and the others are too important, and fairness dictates that the agency afford stakeholders ample time to provide their views. That is even more true while we are in the midst of a global pandemic.

Given my concerns about the legal underpinnings of this rulemaking, I will oppose issuing this proposal. Thank you, Mr. Chairman. I have no further comments.

1 12 U.S.C. 1759(f)(1)(B).

2 Chartering Manual, § 2.IV.A.1. 

3 12 U.S.C. 1759(c)(2)(B). 

4 Chartering Manual, § 2.III.F. 

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