The National Credit Union Administration proposed a rule that would reduce regulatory burdens and make it easier for credit unions to provide member business loans. It will come as no surprise that banks are already commenting in an effort to block NCUA from easing restrictions on member business lending. In the face of strong banker opposition, NCUA needs to hear from you ASAP.
All Cornerstone credit unions are urged to submit a comment letter by the August 31 deadline, urging NCUA to ease regulatory burdens related to member business lending. Yes, it is just as IMPORTANT to support a good regulatory proposal as it is to oppose a bad one. Even if your credit union is not currently engaged in member business lending, we urge you to send a letter in support of the proposal.
Get more information on making your comment call.
The proposed MBL rule represents a major shift from a prescriptive approach to a more principle-based methodology in its approach to member business lending, thereby providing additional flexibility. While many of the requirements not in the Federal Credit Union Act (“the Act”) are being removed from the rule, other new concepts such as requiring a “Credit Risk Rating System” in the MBL Policy are new.
The proposal would create a category of “commercial” loans for safety and soundness purposes and utilizes the category of MBLs for compliance with the Act’s limitations on member business lending. For example, the Act does not categorize any nonmember participations as MBLs and neither does the proposed rule. However, business loan participations are considered commercial loans for the purposes of safety and soundness. The rule would remove all of the specific requirements that currently require waivers, including the personal guarantee requirement. It would also exempt some CUs with less than $250 million in assets from the board of directors and management responsibility requirements and commercial loan policy requirements. The proposal has an 18-month implementation period.
You can view CUNA’s summary of the proposal, and feel free to call Cornerstone SVP Regulatory Compliance Counsel Suzanne Yashewski at 512-853-8516 or email@example.com.