As Prepared for Delivery on July 30, 2020
Thank you, Mr. Chairman.
I welcome the opportunity to finalize our proposed field of membership 3 (FOM 3) rule this morning. We have worked on the issues reflected in this proposed rule for many years, including time consuming and distracting litigation through the federal courts that recently ended when the United States Supreme Court denied the certiorari petition from the American Bankers Association.
Our success in the federal courts did not occur by happenstance. Instead, we thoughtfully analyzed the field-of-membership provisions in the Federal Credit Union Act and the relevant case law and legislative history before proceeding with each FOM rule. I assure you that, after over 38 years of legal practice, I would not have assisted with the design, structuring and implementation of the FOM rules unless I was absolutely confident that they were based upon sound public policy and fell squarely within the four corners of the Federal Credit Union Act and other applicable law. Further, today’s final rule was prepared in strict compliance with the guidance offered by the United States Court of Appeals for the District of Columbia in its opinion.
It is also significant to note that the United States Supreme Court ended the “rural district” FOM litigation in favor of the agency. Although there is no need to address this rule in FOM 3, the resolution of the litigation merits special consideration. The “rural district” rule will assist credit unions in serving underserved and unserved members of rural communities who have limited access — if any access at all — to federally insured financial institutions. Today, credit unions are free to serve an expanded scope of rural individuals and small businesses, thereby offering consumers with a viable choice relative to those lenders who operate under less consumer friendly business models. Without question, this rule serves as a most significant consumer protection safeguard by helping to transform financial deserts into communities of financial choice, all within the Federal Credit Union Act and without safety and soundness risk.
Please allow me to close by quoting Chair Rick Metsger at the October 27, 2016 NCUA Board Meeting, p. 18, when he and I voted to finalize the rural district FOM rule:
We also know that Congress has a longstanding interest in supporting rural areas, whose economies frequently lag urban areas, and where a larger proportion of the population consists of persons of modest means. I'll give you an example. In March of last year, I heard from my U.S. senator from the state of Oregon, talking about the small, unincorporated town of Christmas Valley in rural Lake County. It lost its last financial institution. The several thousand residents of Christmas Valley — you should go there, it's a great place — and the neighboring towns of Ft. Rock, Silver Lake, and Summer Lake, now have to drive approximately 150 miles round trip to find a brick-and-mortar financial institution. We've all heard of food deserts, areas that lack access to supermarkets and grocery stores. Many rural areas are financial deserts, and we can't let communities like Christmas Valley become Christmas Death Valley. We simply have to make it easier for residents of areas to access affordable financial services. That's what this rule helps accomplish.
That’s precisely what we have accomplished through hard work and perseverance, all in strict compliance with the Federal Credit Union Act without safety and soundness risk, and based upon the sound public policy of assisting the underserved and unserved gain access to federally insured financial institutions.