NAFCU Hails Reps. Royce, McCarthy’s Introduction of the Credit Union Small Business Jobs Creation Act

WASHINGTON– The National Association of Federal Credit Unions (NAFCU) today applauded Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) for introducing The Credit Union Small Business Jobs Creation Act, which would expand credit union member business lending (MBL) by raising the current MBL cap from 12.25 to 27.5 percent of assets for eligible credit unions.

“We appreciate Reps. Royce and McCarthy’s continued commitment to and confidence in credit unions and their ability to help small business,” said Fred Becker, NAFCU president and CEO. “We thank them and the other original co-sponsors of this legislation. The time is right for this bill. It is a jobs bill, plain and simple, and will help invigorate our country’s economy by spurring much needed lending to small businesses which are our nation’s job creators.”

Royce and McCarthy offered similar legislation last Congress as H.R. 1418, which drew 144 cosponsors. His new bill, The Credit Union Small Business Jobs Creation Act, would nearly double the current 12.25-percent-of-assets cap, allowing the National Credit Union Administration (NCUA) Board to approve an application by an insured credit union for a 27.5 percent MBL cap as long as the following criteria are met by the credit union:

  • it has met at least 80 percent of its current cap for the past four consecutive quarters;
  • it is classified as “well capitalized”;
  • it can demonstrate at least five years of experience of sound underwriting and servicing of MBLs;
  • it has the requisite policies and experience in managing MBLs;
  • it has satisfied other standards which the NCUA Board “determines are necessary to maintain the safety and soundness of the insured credit union.”

The new bill also caps growth in MBL portfolios at no more than 30 percent a year for credit unions authorized for the higher cap. Any credit union approved for the higher cap would be restricted from making any new MBLs for any period when it drops below “well capitalized.” NCUA would be free to set additional limitations on growth as well.

The bill would require the NCUA Board to issue proposed rules within six months after enactment. It also calls for two reports to Congress within three years of enactment. 

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