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CUNA: MBL Guidance Should be Open for Comment Prior to Final Rule
Thursday, August 27, 2015 6:40 AM

Credit Union National Association says that while it supports proposed changes to the National Credit Union Administration’s member business lending (MBL) regulation, guidance should be released and open to comment before the rule is finalized.

In its comment letter sent Tuesday, CUNA praised the agency for moving from the current prescriptive approach to a more principle-based methodology and urged the agency to release and permit comment on the supervisory guidance it intends to issue.

“CUNA supports NCUA’s approach because it simplifies the regulation and removes many onerous business lending restrictions in the current rule not mandated by the Federal Credit Union Act (FCUA),” the letter reads. “The prescriptive approach may have been appropriate in the early years of business lending; however, in spite of the FCUA limitations and this prescriptive approach, credit unions across the country have developed robust commercial lending programs with experienced management and sound lending practices.”

“The absence of supervisory guidance creates uncertainty that makes it impossible to fully assess the proposed rule’s potential impact on credit unions,” the letter reads, adding that CUNA is concerned that the rule imposes new duties on already heavily burdened volunteer credit union boards, particularly in the absence of such guidance.

CUNA also added that the agency “can and should go much further than this proposal to remove barriers to credit union small business lending,” including revisiting the agency’s interpretation of the exemption for credit unions with a “history of primarily making” or “chartered for the purpose of making” member business loans.

The parts of the proposal CUNA supports include:

  • The elimination of all prescriptive requirements necessitating waivers;
  • Presentation of the MBL cap as 1.75 times of net worth up to the amount necessary to be well capitalized; and
  • Giving state supervisory authorities maximum flexibility for purposes of maintaining existing state regulatory schemes.

Comments can be submitted to the agency through Aug. 31, and Cornerstone urges credit unions to do so. If you need help or have questions, please contact Cornerstone SVP Regulatory Compliance Counsel Suzanne Yashewski at 512-853-8516, 800-442-5762, Ext. 8516, or syashewski@cornerstoneleague.coop.