CUNA files comment letter on NCUA’s member business lending proposal
WASHINGTON, DC (August 25, 2015) — The Credit Union National Association (CUNA) today filed the attached comment letter on the National Credit Union Administration’s (NCUA) proposed changes to member business lending rules. 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).
In summary, the letter says:
- CUNA supports the change from the current prescriptive approach to a more principle-based methodology;
- NCUA should release and permit comment on the supervisory guidance prior to the issuance of the final rule. The absence of supervisory guidance creates uncertainty that makes it impossible to fully assess the proposed rule’s potential impact on credit unions;
- NCUA should detail the minimum requirements that are acceptable for establishing a safe and sound member business lending program;
- CUNA supports the elimination of all prescriptive requirements necessitating waivers. Eliminating these requirements should give credit unions much needed regulatory relief;
- NCUA can and should go much further than this proposal to remove barriers to credit union small business lending. In particular, NCUA should revisit its interpretation of the exemption for those credit unions with a “history of primarily making” or “chartered for the purpose of making” member business loans;
- CUNA supports the presentation of the MBL cap as a multiple (1.75 times) of net worth up to the amount necessary to be well capitalized, which is in better conformity with the statutory language for the MBL cap (Note: This is NOT an increase in the cap nor is it an “end around” Congress);
- CUNA generally supports the new definitions including the newly created definition of “commercial loan” that helps distinguish those loans subject to the MBL cap from commercial loans that invoke the safety and soundness provisions. CUNA expresses reservation on the requirement of the credit-risk rating system that may not be appropriate or necessary in a commercial loan policy;
- There is concern over the newly imposed duties on the already heavily burdened volunteer credit union boards, particularly in light of the absence of guidance by the NCUA on specific requirements;
- CUNA supports the exemption for credit unions that hold a de minimis number and amount of “commercial loans,” but believes the small creditor exemption could be improved to allow all credit unions, regardless of asset size, to take advantage of the exemption for de minimis MBL portfolios;
- CUNA supports giving State Supervisory Authorities (SSA) maximum flexibility for purposes of maintaining existing state regulatory schemes. CUNA is further concerned the rule does not contemplate necessary training and resources needed for SSAs to properly implement the proposed rule;
- NCUA must provide consistent training and guidance to examiners as part of the implementation of this rule since the rule will require more thorough examination of loans and policies by examiners; and
- NCUA should leave a waiver in place for its single borrower limit.
About CUNA
Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.
