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Credit Union Law

More so than almost any other type of financial institution, credit unions have a special culture, capital and governance structure, and set of regulatory requirements. Many of the rules regarding credit union operations are contained in regulatory guidance, or merely exist through the historical operations of regulatory agencies and the institutions they govern. While Congress, the NCUA, and state regulators are slowly bringing credit unions under similar regulatory paradigms as banks, there remain a number of areas in which credit unions remain unique. SW&M has decades of experience with the NCUA and state credit union regulators, and with hundreds of federal and state chartered credit unions.

The fundamental character of a cooperative—who can join—includes special rules, namely regulations regarding field of membership (FOM). Community FOMs, associational FOMs, select employer groups (SEGs), TIP (Trade, Industry, or Profession) charters, the treatment of FOM in mergers, and underserved communities for multiple common bond credit unions each contain their own pitfalls. Working knowledge of the NCUA’s Chartering and Field of Membership Manual can be essential not only for FOM applications, but also to determine when an application may or may not be necessary to accomplish a credit union’s goals or react to corporate changes with a sponsor group. Our attorneys are experts on the addition of and amendment of credit union FOMs, having established the largest single underserved community FOM approved by the NCUA, and representing clients on the forefront of issues involving affinity groups, associational FOMs, and TIP charters.

Normal credit union operations, including interfacing with common credit union core processing systems and historical credit union documents (e.g., signature cards and bylaws), similarly require an in-depth understanding of credit union particulars. When reviewing and creating account and loan documents, it is important to understand memberships, and their interactions with multiple-party accounts laws and laws governing minor accounts. Even closing accounts, a normal financial institution function, can be perilous as a result of members’ fundamental ownership rights. SW&M’s experience extends to the operational nuances of numerous credit unions and the particulars of credit union core processing systems.

Credit union subsidiaries (CUSOs) can be useful tools for expanded operations and limitation of liability, but are only available for certain limited activities (depending on how their owners are chartered). When considering forming a CUSO, credit unions must consider taxation, governance structures, customer bases, investment limitations, and restrictions on compensation and various activities. Additionally, legal opinions obtained at the formation of any CUSO have particular requirements. SW&M is well versed in the regulations regarding CUSOs, and the necessary steps to establish a subsidiary LLC or corporation. Our attorneys also have significant experience with acquisition of going concerns by credit unions, including everything from insurance brokers to money service businesses to premium finance companies.