NCUA Proposed Rule on Changing the Low-Income Definition

CUNA
May 15, 2008 | COMMENTS

The National Credit Union Administration (NCUA) Board has recently issued a proposed rule to change the definition of "low-income" credit unions for federal credit unions (FCUs). The proposal would use median family income (MFI) instead of median household income (MHI) to determine if an FCU can classify as "low-income." This is not a major policy change.

The 2006 Member Service Assessment Pilot Program (MSAP) recommended that the formula for determining whether an FCU qualifies as low-income be reassessed. The NCUA Outreach Task Force agreed with the MSAP that the standard for low-income designation be changed from MHI to MFI, consistent with the practice of other federal agencies.

For a metropolitan area, the proposal would define low-income members as those living in an area that is at or below 80% of the greater of either the standard for the whole metropolitan area or the national standard. Similarly, for those not within a metropolitan area, the proposal would include low-income members living in an area in which the standard is at or below 80% of the greater of either the statewide non-metropolitan area standard or the national non-metropolitan area standard. MFI will generally be the income standard that will be used.

In order to minimize the affect of the changes, the proposal includes a five-year grandfather clause for current low-income FCUs. Credit unions unable to meet the new low-income definition will retain their low-income designation for at least five years.

Comments are due by June 27, 2008. Please submit your comments to CUNA by June 17, 2008.

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Senior Vice President and Deputy General Counsel Mary Dunn at mdunn@cuna.coop and to Senior Assistant General Counsel Jeff Bloch at jbloch@cuna.coop; or mail them to Mary and Jeff c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you would like a copy of the proposal. You may also access it here.

> Read the rest of the comment call and questions here at cuna.org