ALEXANDRIA, Va.—NCUA Chairman J. Mark McWatters said he believes Congress should allow credit unions to serve communities that exist only online. Such a change would better reflect today’s society, McWatters said.
In an interview with The Wall Street Journal, McWatters said, “We need to think about how we can create common bonds, or how we can reflect in the Federal Credit Union Act, what people today use as common bonds. Chances are [such a change] would be very broad, and chances are it would be something that the bankers might not be totally in love with. But again, I am trying to parallel reality today as opposed to what it was a generation—or two or three or four generations—ago.”
While McWatters discussed FOM in the interview, the agency reminded that any changes to credit union field of membership rules would need to come from Congress.
McWatters told the Journal he didn’t rule out the possibility of a huge social network forming a “common bond” for a big credit union. As an example of what such a web-based credit union might look like, he gave a narrower example—an LGBTQ online community organized around individuals’ sexual orientation—as one way credit-union members might form an online-only “common bond,” according to the Journal report.
It is not the first time McWatters has suggested such a change. He made a similar observation during congressional testimony in June.
In response to McWatters’ comments, the American Bankers Association, which currently has a lawsuit pending against NCUA over FOM, told The Wall Street Journal, “The taxpayer-subsidized credit union industry is already exceeding the legal boundaries when it comes to membership, which is why we have asked the courts to intervene. The fact that NCUA now wants to open the doors even further would be laughable if it wasn’t for the fact that taxpayers would once again be left holding the bag.”
During the interview with the Journal, McWatters also defended NCUA’s recent decision to close the Temporary Corporate CU Stabilization Fund and to merge it into the NCUSIF.
“What [credit unions who oppose the decision] are saying is, ‘We just want more money,’ and I get that,” he told the Wall Street Journal. “We have done the numbers…the trade associations and the like that have objected, they have not come back with their numbers. They just come out with something to pull out of the thin blue sky.”