Letter to the NCUA on Chartering and Field of Membership

Dear Ms. Conyers-Ausbrooks:

The American Bankers Association (ABA) appreciates the opportunity to comment on the National Credit Union Administration's (NCUA) proposed rule to amend the associational common bond provisions of its chartering and field of membership (FOM) rules.

While the proposal is presented as a clarification, it raises concerns regarding the continued erosion of the statutory common bond requirement that defines and limits federal credit union membership.

The proposal would revise the agency's current approach by providing that requiring the purchase of a product or service as a condition of membership would no longer automatically disqualify a group from recognition as an association. Instead, NCUA would evaluate whether a client-customer relationship is merely incidental based on the group's activities and overall circumstances.

Although the proposal is narrow in isolation, it reflects a broader pattern of incremental changes that, taken together, have steadily expanded federal credit union membership beyond the limits contemplated by Congress. Each individual revision may appear modest, but the cumulative effect is a meaningful weakening of the common bond framework.

The current rule serves an important screening function by providing a clear and administrable boundary: where membership is conditioned on a client-customer relationship, the group does not qualify as a valid association. Replacing that standard with a discretionary inquiry introduces uncertainty and increases the risk that the associational common bond requirement will be stretched over time. In practice, such a shift invites pressure to reinterpret statutory limits in ways that may not be apparent in individual cases but are significant in the aggregate.

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