Submit Your Comments on the NCUA’s Member Business Lending Proposal

Northwest credit unions are encouraged to submit comments on the National Credit Union Administration’s (NCUA’s) proposed rule on Member Business Lending (MBL).

The NCUA proposed the rule at its June board meeting. The proposed rule would remove almost all MBL requirements not present in the Federal Credit Union Act. It would create a new category of “commercial” loans for safety and soundness purposes and use the category of MBLs for compliance with the Federal Credit Union Act’s limitations on member business lending.

The NWCUA is releasing a draft of its comment letter to the NCUA, which thanks the administration for the positive changes in the proposal, while also sharing credit unions’ concerns. Specifically, the draft letter points out the need for clear guidance and solid examiner training. It also expresses the concern about the possibility of the NCUA preempting state MBL rules.

CUNA will present a webinar on the rule on August 20, and is seeking feedback from credit unions on the following questions:

  • 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?

The proposal is open for comment through August 31.

Questions about this story? Contact James Pearson: 206.340.4790, jpearson@nwcua.org.

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