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CUNA Circulates Draft Letter on Loan Participations Proposal

CUNA is urging NCUA to drop its proposal on loan participations in a draft letter that was recently circulated to various CUNA subcommittees and the AACUL Regulatory Advocacy Advisory Committee. Among other things, the proposal would make loan participations more complicated and would actually undermine safety and soundness by minimizing the ability of credit unions to use loan participations effectively.

CUNA is strongly recommending that instead of proceeding with a new proposal, NCUA allow credit unions that purchase loan participations—which are the focus of the proposal—to address concentration limits, loan participation agreements, and underwriting criteria in their board polices according to their capacity to manage risks. CUNA disagrees that such credit unions should have to follow an onerous new set of regulatory requirements that include arbitrary concentration limits and underwriting standards.

Comments are due to the agency by February 21. Feel free to let Elaine Rowley know if you would like a copy of the draft letter. CUNA will be filing the final version of its letter early next week and a copy will be available to all CUNA members.

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