With NCUA’s new member business lending (MBL) rule now effective, CUNA’s compliance staff took a look at the rule’s new expectations for boards of directors and management in a recent CompBlog post. According to the rule, federally insured credit union boards of directors must approve the MBL policy, ensure the lending program is appropriately staffed and understand the nature of risk in the commercial loan portfolio.
NCUA’s MBL guidance provides some detail on how these requirements can be met. The board should review the MBL policy annually, and should ensure that the commercial lending program is staffed with personnel with the appropriate expertise.
To understand the level or risk, the board must receive periodic updates from the credit union’s management on the performance of the portfolio.
Senior management must:
The guidance notes that any staff involved in a commercial loan program must have sufficient expertise, and goes into a bit more detail on the expectations for those individuals at the manager level that are responsible for commercial lending.
Credit unions must also employ “qualified lending personnel” with experience in the following areas:
NCUA examiners will evaluate staff experience primarily by focusing on the overall type and relevance for those involved with the commercial loan program, with an emphasis on experience in commercial loan risk management.
According to the guidance, credit unions can meet these requirements by training and developing existing staff; hiring experienced professionals; or using a third party, such as a credit union service organization or third-party contractor.