Credit Union Exam Solutions Presents With Flying Colors

Mark Treichel: Okay.

Hey everyone, this is Mark TL with
another episode of With Flying Colors.

I'm excited to be here with Rick.

Mom.

Rick, how you doing today?

Rick Mumm: Doing great,
mark, how about yourself?

Mark Treichel: I'm doing fantastic.

NCOA has been announcing a lot
of what they're calling rounds of

deregulation proposals, and a lot
of those I've described as turning

happy to glad or glad to happy.

But there's a couple of them that
actually make a difference or make

a potential difference, and one of
'em ties into field of membership.

And they made a proposal on that.

When I saw, I thought, Hey Rick, I
think you might know a lot about this.

Maybe we should do a quick little
podcast to, to clue people in.

So with that, as a preface, maybe
if you could it is been a while

since I had you on the podcast.

Maybe walk through what it is you did
at NCUA and what it is you've been doing

since NCUA in the credit union arena.

Rick Mumm: Okay.

Yeah.

Thanks Mark.

Yeah.

As at NCUA I was there, what, a little
over 34 years, and for about 26 of it I

worked with field of membership, which
meant bylaws, mergers, liquidations,

and charter expansions, everything
you know, and credit you wanna

do with its fields of membership.

I worked on, and since retiring,
I have been helping credit unions

with field of membership expansions
community charters, underserved areas.

They added a low income
association for credit union.

Done a couple, did a new charter, working
with some other groups on new charters.

So just.

A little of the whatever, credit unions
field of membership wise, I've been

Mark Treichel: helping.

That's what you've been doing.

Yeah.

And you've been helping, you've
been, you, sometimes you help

with my clients and then sometimes
you do some stuff on your own.

And there was one situation where
I think you worked out an appeal

that went to the NCA board.

And we don't need to work, talk about
the specifics of that particular

credit union, but there's a.

How do I wanna say this?

There's a lot of rhythm or
rhyme to what you helped this

one credit union appeal to.

What we're about to talk
to talk about relative to.

Rick Mumm: I don't know.

Is it okay to name the credit union?

They're okay with it.

Mark Treichel: If, hey, if
you're, if they're okay and

you're okay let's let it roll.

So with that I'll just
turn it over to you.

You can talk about.

The proposal you can talk about
the appeal or whatever you think

makes sense to educate the public on
this proposal on field membership.

Rick Mumm: Okay.

Yeah, so this the proposed rule change
for FOM clarifies customer client

relationship the customer client
relationship for adding a field,

a group to a field of membership.

Currently if a group is customer,
client related it is not eligible.

For addition to a field of membership and.

Customer client relationship just
as a little could be like like good

examples are Costco, aaa, they,
you pay for a membership, but their

customer client because the primary
reason for those membership is to get

auto services, or in case of Costco,
you can buy enough stuff to, that

you can will to your great grandkids.

It'll still be left.

I,

Mark Treichel: Rick I went into
Costco for blueberries and a

thousand dollars later I had two
carts full that ever happen to you?

Rick Mumm: Y yeah.

Mark Treichel: But I digress.

Going to Costco's all about the good
deals, it's not necessarily about it.

It's the primary focus, I
think is what we're getting

Rick Mumm: to, right?

Yeah.

But it is a membership and so
membership, associations in for credit

union field of membership is based on
membership, but it's, doesn't qualify

because it is a customer client.

You pay for the membership so
you can get the good deals.

There's other, there's other customer
client relationships that are

they may or may not be, like you.

Join a zoo or a museum.

Some of those are customer
client relationships.

Some may qualify.

And then there's the other, which this
case specifically relates to is fraternal

organizations where you you buy insurance.

I've worked.

Jennifer, I, the CEO at POAM Federal
Credit Union in Los Angeles contacted me

about adding a fraternal organization.

And I said it's gonna be iffy.

'Cause it.

It is a fraternal organization.

And long story short, we took it all the
way up to the NCUA board as an appeal.

And this rule is the direct
result of that appeal.

Mark Treichel: And it was iffy because
it basically, the old rule said

if there's a client relationship.

You can't do it.

Rick Mumm: You can't do it.

And it specifically said if
it's a fraternal organization

that sells insurance, it doesn't
qualify, which this did, this does.

But the chartering manual, even though
it says that the chartering manual

doesn't really define customer client,
it doesn't define primarily, what is

the field of, membership relationship?

But the chartering manual also says that
the Knights of Columbus specifically

qualifies as an associational group.

Mark Treichel: And that was your hook.

And I think that was your hook, right?

That was where you were able to pick
your, get your dog under the tent, right?

Rick Mumm: E, exactly.

That was one of my.

My hooks is that the chartering
manual states, the Knights of

Columbus specifically qualifies.

It's a fraternal organization
that sells insurance.

So why can't, the fraternal
organization, she wanted to add.

Why exclude it?

And the the interesting things is if
you look at the Knights of Columbus,

and there's also Thrivent, NCUA,
chartered Thrivent, it converted from

I think a mutual bank or whatever.

I don't remember what it was.

Mutual

Mark Treichel: savings Bank.

Yeah,

Rick Mumm: bank.

Yeah.

But it converted to a credit union.

And Thrivent is also a mutual insurance
so I had Thrivent and Knights of

Columbus doing the exact same thing.

And when you look at Thrivent's
website and information in Knights

of Columbus, they are very much
into the selling of the insurance.

They're both highly rated.

They have press releases about the
insurance companies, everything else,

and the group that Jennifer wanted
to add, yeah they sold insurance.

They didn't start out selling insurance.

They started out trying to
serve their group and then,

eight to 10 years in, they.

Wanted to help their very poor membership.

And so they started offering insurance.

So their primary focus
was always the membership.

They have tons of activities.

They did tons of events.

You go to their, I won't name the group,
but you go to their website and it's

all about the group and the insurance
is just one of the things they offer.

That was enough.

Why, cure denied it.

But the final appeal, the board denied
it, but they also said they recognize

that there are discrepancies in the rule
and the task here to rewrite the rule.

To allow it.

So this is,

Mark Treichel: so this is that,
this is that proposal, this

is that task coming coming

Rick Mumm: fruition.

This is that rewrite now in the
appeal, it said they were supposed

to do it within nine months and it's
been almost, I think two years now.

So didn't quite make that, but and to be
fair to cure an NCA, I think the election

came about and there was, rules, but

Mark Treichel: the election and
they're shrinking their staff and,

Rick Mumm: And all of that, so yeah.

Yep, yep.

Down to one board member.

Just there is some external things, but
so yeah, so that's what this rule does is.

Is address that appeal?

What there was, because some of the
other things that, going through the

appeal and that was very interesting
is they said it's customer, client.

They required insurance,
the purchase of insurance.

So therefore that was
the basis for the denial.

But they did say if the group.

Put in there that you didn't
have to buy the insurance.

Could be a member.

They could.

They could be We.

They could add it.

The field of membership, and both
Knights and Thrivent have a thing in

there that says you do not have to
purchase insurance, which is how they.

They're able to get at it
to the field of membership.

But the interesting thing about
both of those, and that I brought

out in the appeal is that if they
don't buy insurance from either

one, neither one have voting rights.

Neither one are they're
considered affiliates.

So they're not full members and.

90 I couldn't find a percent of
what percent purchase insurance

through them versus not.

But if you look at their annual
reports and the amount of insurance

they sell is, my guess is 90 plus
percent or more purchase the insurance.

'cause I also couldn't see that they do
a whole heck of a lot of other activities

that would make you want to join.

Otherwise.

I'm thinking it's a very high percent.

The interesting thing is the chartering
manual gets into, you have to be

a full member, a voting member.

Affiliate members do not qualify for
membership per the Chartering manual,

and both Thrivent and Knights of Columbus
consider anybody that doesn't buy the

insurance to be affiliate of members.

So under the Charting manual,
those members don't qualify.

Mark Treichel: Now they're
not eligible to join.

They're

Rick Mumm: not eligible
to join the credit union.

Yeah.

Now you and I both know
that they're getting added.

The credit unions aren't looking at that.

The point is the chartering manual.

States, they're not allowed
to join or so they're not even

eligible to join the credit union
if they don't buy the insurance.

So the only people eligible to
join half the insurance are the

ones that are buying insurance.

So you're, so this group,
100% of everybody, yeah,

they don't have that clause.

You don't have to, but a hundred
percent would be able to.

Join the credit union because they
have full voting rights, whereas not

everybody has the full voting rights.

So that was one of the discrepancies
I brought out is that okay if they

don't buy the insurance, they're not
eligible to join the credit union

anyway because the group requires them
to buy it, to even have voting rights.

And those.

Affiliate members, the charting
manual specifically states affiliate

members do not qualify for membership.

Mark Treichel: That's wild.

And when you say the charting manual,
it's the current one, not the proposal.

We haven't we haven't even
talked about what the propo,

how the proposal structured yet,

Rick Mumm: right?

Yeah exactly.

It's the current one.

So you've got these discrepancies that.

I brought out, and the board
recognized that, but they still denied.

The gr still denied the appeal.

Mark Treichel: You got a
proposed reg out of it.

You got a commitment
to make a proposed reg.

And so let's and by the way I think
this, I think you are the one, one and

only former NCOA employee who helped
the credit union appeal something.

That led to a proposed reg change.

Hopefully we can say this led to a
final reg change and I think it will.

If they proposed

it,

Rick Mumm: I, no I think
I, I think it will.

Mark Treichel: I think it will too.

Yeah.

But, so a congrats for being the
only person to ever achieve that.

And I know I haven't, 'cause I've never
really appealed anything, help anybody

appeal, anything like that, camel codes
or things like that I've assisted on.

But that's exciting.

But let's pivot to what the proposal
says and let's assume that as written,

the proposal gets approved, right?

If someone wants to, if someone
wants to add someone like po a is

contemplating what's, what would the
new requirements be in order to get

them added to the field of membership?

Rick Mumm: The the new rule is very.

Very sparse and I'm very excited for it.

And I think ultimately we can go back
to PO a and they'll be able to get

what they want with the new rule.

That said, I am, the new rule really
doesn't address a lot of what.

I brought out, in fact, it
doesn't address any of it at all.

It just says that and it, excuse
me it just says that, nCA will now

look beyond the character of what
the customer client relationship is.

And if it's incidental it'll prove it.

So it doesn't change anything
about who's eligible.

It doesn't change voting rights.

It doesn't change or
even address any of that.

And it's, I like the rule 'cause it's
there and I, like you said, I feel like

I have a big part of why it's there.

Mark Treichel: Yeah, absolutely.

Yeah.

Rick Mumm: But it's also not what
I had in, when the board in its.

Denial stated, I, I guess I contemplate
contemplated more than what's here.

'cause it just, it eliminates the
fraternal organization that offers

insurance is not eligible for membership.

It eliminates that and just basically
says it'll look at the entire,

Mark Treichel: the totality
of the circumstances.

Rick Mumm: Yeah.

But it doesn't even say totality
of circumstances doesn't

Mark Treichel: so it comes
down to the narrative.

You put forward the facts
that show that it's not like

a Costco where it's all about.

Buying stuff, that there's other
things that the organization does

that would make someone be a member.

And it's kinda like
defining beauty, right?

You know it when you see it, and
you'll you'll put the narrative in and

then it say, we will eval, evaluate
that, but then that creates an

opportunity if they deny it to appeal.

Rick Mumm: Yeah.

So yeah.

So it's a very minimalist, reg.

And it, it just says they'll
look behind the customer client.

But it doesn't really give a whole
lot of guidance on that, if, it'd

be helpful if it actually said it'll
look, if it meets the totality, the

circumstances, otherwise it'll approve it.

It doesn't.

It doesn't say that.

And given all the changes in cure, the
fact that there is now very little,

if any corporate knowledge, they

Mark Treichel: lost a lot
of te, a lot of people

Rick Mumm: in the body, a lot of people.

And they've promoted
people into positions that.

They hadn't even been in CURE for
more than a couple years, and they're

already in positions that it's huh.

So I, so they, without the added guidance
or putting something in, I'm concerned.

With where it's gonna go?

Or end up?

Mark Treichel: The good news is, a
glass half full will be, they made

the change, so they're open to it.

And when they finalize this rule you
and Pom can be first in line to say,

okay, here's what we think this means
and here's why you should approve it.

And then if they approve it, then
there's a first standard that.

NCA can go back to the next time
somebody asks, says, oh yeah,

we already proved one of these.

Rick Mumm: Right.

Mark Treichel: So you're,

Rick Mumm: yeah, because

Mark Treichel: you're paving a road,
you're paving a road here, Rick, with

with Olam and Ola is paving a road.

I think that's gonna help some
associations and some credit unions.

Rick Mumm: No, I agree.

And I think Jennifer, what I've
talked to her is really happy.

If.

The group still wants to go
through the process, who knows?

But the group, other than that insurance,
if you look at the totality of the

circumstances for that particular
group they met 'em all, and there's

a lot of groups that you know.

I worked with over the years that
got approved that, they didn't

meet all the totality, yeah.

They met the totality, but,
there's a lot of areas that they

didn't, and we still approved it.

And this group, other than the fact
that, they were selling insurance

or because they're a internal
organization, that had been around.

150 years or whatever.

Yeah,

Mark Treichel: yeah.

Rick Mumm: They were selling the
insurance before the IRS and all

these rules even came into effect.

That's funny.

So they were, they are truly
in every sense of the word, an

association, they met everything,
whereas a lot of associations don't,

Mark Treichel: right.

Rick Mumm: So I think that'll be.

That'll be helpful.

And I think, yeah, we'll get, should
get approved if they want to go.

Still wanna continue going forward.

Mark Treichel: Yep.

Makes sense.

So a anything el anything else I
should have asked you about this,

Rick, about the proposal about what
might be final or how this might work?

I think we covered it, but I but

Rick Mumm: Yeah.

No I think we pretty much covered it.

'cause the rule itself is just.

Very straightforward.

We it is the result of the appeal.

Mark Treichel: Yep.

Rick Mumm: That's finally
they're going forward with.

But I think, that's it.

Now, if anybody else.

Does have more questions as a result
of this or reading it they're more

than welcome to reach out to me

Mark Treichel: and how, and if someone
wants to, has listened to this and

they go, Hey I want to talk to Rick.

About about this part of field membership
or quite frankly, any other type of

field of membership, what's the best
way for someone to be able to reach

you?

Rick Mumm: They can go to my
email is rick@rcservices.com,

or they can go to my website,
www rc c services.com,

all one word.

And then there's this place
in there where they can.

Put their information
in that'll get to me.

Or the email either, either works
and I'd be more than happy to

discuss or talk to 'em about anything
and everything they want, if they

want more information on this rule
change and encourage anybody that

is, has ever wanted to
add an association that.

Had customer, client to write into the
board make sure you get your comments in.

Mark Treichel: That's a great point.

Yep.

Yeah.

They ex, if you've got situations
that apply point them out and that'll

help maybe get this moved a little
quicker than the two years more

because you get the proposal up.

Rick Mumm: Yeah.

'cause I know I plan on.

Sending in a comment and Excellent.

And I know Jennifer is too,

Mark Treichel: fantastic.

Fantastic.

Rick I wanna thank you for your time and
as we're talking here, I think I can't

remember when we had level one training
at NCUA other than it was late 1986.

Rick Mumm: It was.

It was January of 87.

Mark Treichel: Oh, Jan.

Okay.

So they let us run around in credit
unions for a few months before

that, because I started in October.

Rick Mumm: Yeah.

'cause when we started,
there was no level one.

It was

Mark Treichel: just Oh, that's right.

See, you're already reminding

Rick Mumm: me.

It was I, or I guess what,
when we finally went.

It was, they may have called it level one.

Yeah.

But I think now it's level,
technically level two.

Mark Treichel: Got it.

Yeah.

So we met January 1987.

Almost seven.

Yeah.

39.

39 years in a few months.

Yeah.

We'll have to celebrate our 40th
anniversary of knowing each other.

Come January of next year,
I'll put it in my calendar.

Rick Mumm: Oh, that's a great idea.

Yeah.

'cause I can remember old the first
day Marty Kushner went in and said.

We were there at a great time.

It had been a real mild winter and we
should really love DC and I think two

days later they had a record snowstorm
and we couldn't even get into the

building 'cause they down the metro.

Mark Treichel: I remember.

I remember that.

And I stayed back.

That was the Giants in Bills Super
Bowl year, if I remember right.

And there was a group that went into the
office and there was a group that didn't.

And I stayed back with the.

With the entertaining loud
trainer that we had out of

Boston who will remain nameless.

But he was a great trainer and
yeah, he was he argued with the

other guy saying, I'm not coming in.

And I figured that he would win
the argument and I didn't wanna

go in through all that snow.

'cause I didn't, I left Minnesota.

I didn't bring boots.

I, it was supposed to
be really good weather.

So anyway.

Yeah.

Rick Mumm: I didn't even have any,
'cause I wasn't from a police.

That's because you're from the west

Mark Treichel: coast, right?

Yeah ah,

Rick Mumm: But I can remember we were
in the office and they sent everybody

home, but they didn't send us out and
we stuck around another hour or two.

And I think when they finally let us
go, I think we were on one of the, if I

remember right, one of the last metros
that he was even allowed to leave.

Mark Treichel: Wow.

Yeah.

And I think I never left the
hotel that day, so I got lucky.

All right, Rick, this
has been a lot of fun.

Thank you.

Listeners, watchers, I want to
thank you for listening or watching.

I hope you'll do the same again soon.

This is Mark Trekel signing
off with flying Colors.