Title : FOM Policies, Just Not Reg Burden, Threaten Small CU Survival
FOM Policies, Just Not Reg Burden, Threaten Small CU Survival
In an opinion piece in The Hill, former Representative Jim Nussle, president and CEO of the Credit Union National Association (CUNA), wrote that regulatory burden is threatening the survival of small credit unions.It is true that small credit unions, as well as small community banks, lack the economies of scale to spread out the cost of complying with all the new regulations and may cause these institutions not to be viable.
But regulatory burden is only part of the story.
Changes in field of membership (FOM) policies and practices that have fueled expansive community charters and permit anyone to join a credit union through an association have allowed large credit unions to poach smaller credit union members.
But this has not always been the case. Historically smaller credit unions received overlap protection with regard to their fields of membership. Overlap protection was designed to protect smaller credit unions operating in the same market as larger credit unions.
However, overlap protection has largely disappeared.
This is leading to increase competition between smaller and larger credit unions hastening the demise of small credit unions.
As Paul Harvey used to say, "And now you know the rest of the story."
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