WASHINGTON (2/19/16)--The biggest thing for credit unions to know about the National Credit Union Administration's newly adopted overhaul of federal member business lending regulations is that it strips all restrictions from the rule that are not specifically laid out in the Federal Credit Union Act (FCUA), noted Elizabeth Eurgubian Thursday.
"And beyond that, there also is much good news in this new rule that is spelled out in the details," she added. Eurgubian is deputy chief advocacy officer and senior counsel for the Credit Union National Association (CUNA).
For instance, she said, CUNA worked closely with the agency to ensure its waiver of the personal guarantee requirement for MBLs would be effective 60 days after the rule's publication in the Federal Register. The overall rule goes into effect on Jan. 1, 2017.
"The split in the effective date helps credit unions in two ways. It serves to give faster relief from the unnecessary burden of the loan guarantee, while setting a delayed overall effective date that will support them in their efforts to implement broad changes in their MBL programs," the CUNA regulatory expert detailed.
The three-member NCUA board voted unanimously to approve the regulation Thursday. Prior to the vote, 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."
CUNA strongly backs a principles-based methodology.
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."
CUNA will continue to work with the agency, he added, to comment on guidance for the benefit of all credit unions.
Other key points of the new rule include:
The NCUA received about 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.