ALEXANDRIA, Va. (2/18/16, UPDATED 11:25 a.m. ET)--The National Credit Union Administration just approved a final rule, supported by the Credit Union National Association (CUNA),that represents a complete overhaul of the NCUA’s member business lending (MBL) regulation. The board's vote was unanimous.
CUNA President/CEO Jim Nussle welcomed the new rule, saying, “Expanding credit union member business lending to empower credit unions with greater flexibility and autonomy in offering commercial loans is a major victory for America’s small businesses and job creators."
Prior to voting in favor of the MBL rule, NCUA Chair Debbie Matz said, "With this new rule, we will begin a new era, for NCUA as a regulator and for credit unions as business lenders. This new era will be defined by principles-based regulation, not by prescriptive limits on credit unions."
Under the set of rules, almost all requirements not in the Federal Credit Union Act (FCUA) are removed from the regulation.
Some key points of the new rule:
The agency rule also moves to a more principle-based methodology and removes the personal guarantee requirement on MBL loans, provisions strongly advocated by CUNA.
The personal-guarantee provision of the rule will be effective within 60 days of the rule's publication in the Federal Register. The rest of the rule goes into effect on Jan. 1, 2017, giving credit unions time as they work to implement the broad changes.
CUNA's Nussle thanked the NCUA for removing nearly all requirements on member business lending that are not included in the FCUA. He noted, "CUNA worked closely with the agency to ensure the Personal Guarantee waiver would be effective 60 days after publication and we will continue to work with the agency to comment on guidance for the benefit of all credit unions.”
The NCUA received 3,100 comment letters after the MBL changes were published for comment. Banks launched a significant letter-writing attack on the modernization of the credit union MBL rule.