Because of lawsuits filed by banks, employees of small companies cannot join a credit union in many circumstances unless their company was part of the credit union when it was chartered. This means that unless a small company has enough employees to start its own credit union and the majority do not those employees do not have the choice of conducting their financial business at a federally chartered credit union. This restriction does not apply to state-chartered credit unions. If a credit union is federally chartered, it must use the word federal in its name, such as XYZ Federal Credit Union. A state-chartered credit union's title would read XYZ Credit Union.
Credit unions can, however, continue to serve all current members.
The National Credit Union Administration, the federal regulatory agency that oversees federally chartered credit unions, began 14 years ago allowing credit unions to accept small employee groups into their fields of membership. Those groups each have their own common bond. That policy was a response to changes in the American economy, such as the closing of manufacturing plants, which left credit unions that were tied to only one employee group more susceptible to going out of business if that company ceased to exist. Credit unions believe banks are trying to benefit themselves by restricting as many people as possible from having a credit union choice available to them. They believe this is simply a strategy to eliminate competition so banks can earn more profits.