WASHINGTON (8/26/15)--While CUNA supports proposed changes to the National Credit Union Administration’s member business lending (MBL) regulation, guidance should be released and open to comment before the rule is finalized.
In its comment letter to the agency sent Tuesday, CUNA praised the agency for moving from the current prescriptive approach to a more principle-based methodology.
“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),” the letter reads. “The prescriptive approach may have been appropriate in the early years of business lending; however, in spite of the FCUA limitations and this prescriptive approach, credit unions across the country have developed robust commercial lending programs with experienced management and sound lending practices.”
CUNA also urged the agency to release and permit comment on the supervisory guidance it intends to issue. The proposal requires a more thorough examination of loans and policies by examiners, so the NCUA should provide consistent training and guidance to examiners, CUNA added.
“The absence of supervisory guidance creates uncertainty that makes it impossible to fully assess the proposed rule’s potential impact on credit unions,” the letter reads, adding that CUNA is concerned that the rule imposes new duties on already heavily burdened volunteer credit union boards, particularly in the absence of such guidance.
CUNA also added that the agency “can and should go much further than this proposal to remove barriers to credit union small business lending,” including revisiting the agency’s interpretation of the exemption for credit unions with a “history of primarily making” or “chartered for the purpose of making” member business loans.
The parts of the proposal CUNA supports include:
Comments can be submitted to the agency through Aug. 31, and CUNA urges credit unions to do so.