NCUA Chairman Rodney E. Hood Statement on the NCUA’s Final Field-of-Membership Rule

As Prepared for Delivery on July 30, 2020

Thank you for that presentation.

I am very pleased that the Board is considering this final rule.

When the courts upheld our field-of-membership rule, it was welcomed news. I believe this decision will also help credit unions grow and reach more potential members in rural and underserved areas.

And today’s final rule before the board today is a significant step forward to fully resolve this matter.

As I have said before, I intended for the NCUA to take a phased approach to implementing the August 20, 2019, decision from the D.C. Circuit Court of Appeals and with the recent decision by the Supreme Court not to review this decision, the agency is prepared to bring this process to completion.

Today, with this rule, the Board is taking a critical step in the NCUA’s ongoing work to allow credit unions to alleviate some of the difficulties of low-income and underserved Americans in accessing financial services. I often call financial inclusion the civil rights issue of our time, and this rule will help maintain and expand financial access to more Americans in rural and underserved communities.

As you mentioned in your presentation, this important work dates back to 2015 and 2016, when the Board issued the rule referred to as “FOM1.” This rule faced an immediate legal challenge from the American Bankers Association, and I was glad to see the decision from the D.C. Circuit Court of Appeals last August upholding key parts of FOM1.

As I announced shortly after that decision, I believed it was important for the NCUA to take a phased approach and provide guidance to all credit unions following the court’s decision. With the Supreme Court’s recent decision declining to hear the American Bankers Association’s request to review the Circuit Court’s decision, we will take some critical next steps. Let me highlight some of the key actions we have already accomplished and how today’s rule will help us achieve even more progress:

As I announced last September, federal credit unions may submit applications seeking expanded rural districts serving geographic regions that encompass up to one million people and that meet the other requirements set forth in the agency’s field-of-membership rules. Subsequent to the Supreme Court’s determination not to review our case, the agency has reinstated 18 rural districts that had previously been rolled back. I want to commend the NCUA staff who worked to quickly reinstate these charters.

Today, with this new rule, the Board is reinstating the combined statistical area option from FOM1, in light of the D.C. Circuit’s favorable decision.

With the today’s rule, the Board is also complying with the D.C. Circuit’s expectation to provide further explanation for FOM1’s elimination of the core-area service requirement for core-based statistical areas.

These changes reflect three key principles:

• First, access to financial services for people of modest means—whether in rural or heavily populated areas,
• Second, greater choice and flexibility for consumers and federal credit unions; and
• Third, by enhancing flexibility, we will be better able to ensure the safety and soundness of a new or expanded community credit union as well as protect the Share Insurance Fund. I believe this rule will help achieve all goals.

I also want to emphasize that I take access to financial services very seriously, and therefore I am delighted that this rule clarifies and enhances the agency’s authority to address potential discrimination in the chartering process. Credit unions have a very strong track record in providing services to those of modest means, and these procedures will simply build on the existing process to help ensure continued success in this area.