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Action Request: NCUA Introduces Member Business Lending Proposal

The National Credit Union Administration (NCUA) has introduced a Member Business Lending (MBL) Proposal that would make significant changes regarding credit union business loans to members. The MBL proposal comment period is now open and ends on August 31. 

Bankers are already sending comment letters in droves in opposition to the measure. Don’t let them speak for the credit union industry! Whether your credit union currently offers member business loans or would like to have more options to do so in the future – this is your chance to weigh in on the MBL issue. The Missouri Credit Union Association will write a comment letter to the NCUA regarding this issue. However, MCUA also urges your credit union to send an individual comment letter.

MBL Proposal Background:

The proposed rule would completely overhaul NCUA’s MBL regulation. Almost all requirements not in the Federal Credit Union Act would be removed. The proposal would:

  • Create a category of “commercial” loans for safety and soundness purposes
  • Utilize the category of MBLs for compliance with the Act’s limitations on member business lending
  • Remove all of the specific requirements that currently require waivers, including the personal guarantee requirement
  • Exempt some credit unions with less than $250 million in assets from the board of director and management responsibility requirements and commercial loan policy requirements

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 proposal has an 18-month implementation period. Click here to see the Federal Register Notice.

Request for Action

1.) Provide feedback to CUNA on any or all of these points. Send that information to Lance Noggle at lnoggle@cuna.coop:

  • Do you believe that the switch from a prescriptive rule to a principle-based rule will provide you more flexibility in making business loans?  Why or why not?
  • Will the adjustments in the calculations of loans that count for the MBL statutory cap assist your credit union in making more MBLs?
  • Does the proposed rule provide you with sufficient clarity to know what will be required in your policies/procedures? How will the proposed rule affect your current lending practices/policies?
  • Are you comfortable that your examiner will be able to examine your portfolio and policies utilizing a principle-based rule?
  • Does the removal of the waiver process benefit your MBL program?
  • Does the distinction between commercial loans and member business loans benefit your MBL program?
  • Will your credit union need to create a credit risk rating system or credit grading system in order to comply with the proposed rule?

2.) CUNA will be hosting a free member business lending webinar on August 20. This webinar will explain more about the proposal and provide assistance in writing a comment letter. To register, click here.

3.) We urge credit unions to send a personalized comment letter by August 31 using PowerComment to submit the information. Utilize the above questions to help frame your comments and express how this change would impact your credit union.

The Missouri Credit Union Association’s Regulatory Compliance Department is also here to help! Please contact John Thomas, Senior Vice President, Regulatory Compliance, via email or phone, 314-542-1385.