As Prepared for Delivery on February 16, 2022
Today’s proposed rule is a step in the right direction. For example, I am glad it makes it easier for family members of deceased family members to join a credit union. I also am glad that the NCUA Board is recognizing in today’s proposed rule that hybrid work is impacting the traditional definition of affinity groups for community charters, namely people who live, worship, attend school, or work in the community or rural district. Today’s proposed rule attempts to capture remote work employees as affinity groups for community charters. This is a positive development. But we have much more to build upon in this rule and from previous Field of Membership rulemakings.
Serving the underserved has been a hallmark of my time on the NCUA Board. More must be done to increase credit union access in rural, minority, disabled, and tribal communities, among other communities, where currently all that may exist is a pernicious and predatory payday lender. Personally, I believe the best way to do this is to allow mobile phones to serve as service facilities. For us to continue to use, an antiquated definition of service facility is not responsible in my view. When the Federal Credit Union Act was signed into law in 1934, I venture to say that no one living at the time could have imagined ATMs. Yet, with the advent of ATMs, our regulations evolved to consider how ATMs represent a service facility.
In 2023, the reality is that mobile banking is how many members are served by credit unions. And as I previously mentioned at this Board table, more and more credit union members are making their phones the primary place they access financial services. At some point in the future, it is my great hope this Board can allow for mobile applications and digital delivery systems to meet service facility requirements. If we have learned anything since the COVID-19 pandemic, we should recognize that members are using mobile and internet banking at a higher rate than branches. In my view, the regulator must respond to changes in technology just like credit unions are having to do.
I do have several questions:
How does the agency address areas in which large bodies of water fall between land masses? This has consistently come up in meetings with Alaska and Hawaii credit unions.
In the proposal, a multiple common-bond credit union could consider adding a rural district as an underserved area even if the area is not contiguous to the state in which the credit union maintains its headquarters. The prior Board included this restriction for community charters based on rural districts to avoid having the areas become too expansive. For the record, why is the NCUA Board proposing this exception now, and would this specifically impact states like Hawaii and Alaska?
Shifting gears, and for the record, can you explain what the concentration of facilities test is for underserved areas?
So, prior to 2009, we did not do a concentration of facilities test. This was a creation of the NCUA intended to help the agency to meet our statutory responsibilities. While the CFT is a well-intentioned test originally designed to help identify the concentration of depository institutions, some credit unions have approached me with concerns about the application and timeliness of this test. After 15 years of experience with the CFT is it time to reexamine this test?
Thank you. I certainly think it is appropriate to take a hard look at this test, not only from the perspective of identifying additional areas that might be overlooked but also from an efficiency and effectiveness standard. Although, as you state, most of the time the underserved areas pass the CFT either as submitted or modified from the original request, it would seem to me that with the data and resources that are available to us, we should be able to let credit unions know the results of the CFT in a much more timely fashion. While I can appreciate that more evaluation is expected to take place during future rulemakings, I would like to see a concerted effort to expedite the process presently and until such time that meaningful revisions and reforms can be applied to our current methodology.
Thank you. I have nothing further.