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This past week, your League sent its comment letter to the National Credit Union Administration (NCUA) on the agency's proposal regarding improvements and changes to the Member Business Lending (MBL) Rule. Your League wrote favorably with regards to the proposal, reiterating previous statements made in interviews and discussions that the MBL proposal is "a significant step in the right direction and an overall positive for Maine's credit unions."
Elise Baldacci, your League's Director of Governmental Affairs, submitted the letter on behalf of your League. She focused much of the letter providing the reasons why your League supports the proposal. "Small businesses are the backbone of Maine's economy and the NCUA's MBL proposal makes improvements that will allow Maine credit unions to develop MBL programs that best fit their members' needs. Specifically, we support many of the waiver eliminations, the clarified categorization of nonmember participations, and the new commercial loan definition. The current waiver process is cumbersome for many credit unions and has deterred participation in MBL programs in the past. The NCUA's proposal to eliminate waivers would have a positive effect on credit unions. The revisions to the current loan-to-value requirements and the unsecured lending limitations will level the playing field for credit unions in Maine and across the country. The option to provide business loans without personal guaranties will similarly open up new business lending opportunities to credit unions. We are very supportive of the NCUA's clarification that purchased nonmember business participations will not be classified as MBLs. Currently, a credit union must obtain a waiver if its combination of MBLs and purchased nonmember business loan participations cause it to exceed the MBL cap. In practice, there have been very few of these waiver requests. We strongly believe that allowing credit unions to purchase nonmember participations with no impact on the MBL cap will allow credit unions to operate more easily within the MBL regulations while also meeting member business loan demands."
In the letter, your League also brought several concerns to NCUA's attention including moving the single obligor limit of 15% of net worth into the commerical loan policy requirement. "As a state with many small credit unions, we have significant concerns regarding the proposal to move the single obligor limit of 15% of net
worth into the commercial loan policy requirement and remove the related waiver provision. We believe this part of the proposal will have a negative effect
on smaller credit unions and could actually cause a decrease in member business loans," Baldacci wrote.
Your League also urged the NCUA to consider allowing credit unions to comment on the guidance NCUA will provide to examiners.
"The NCUA's MBL proposal provides a 'real' opportunity for credit unions to potentially help thousands more small businesses in Maine. This has been an issue your League has been actively involved in for a decade or more, and many aspects of this proposal are changes we have sought. We felt it was appropriate to send a letter to convey our support, while raising some concerns we still have," stated your League's President John Murphy.
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