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As the deadline to submit comments on National Credit Union Association's (NCUA) Member Business Lending (MBL) nears, your League encourages Maine CUs to participate in a free webinar hosted by the Credit Union National Association (CUNA) to discuss the proposal and ideas and information on how to craft a comment letter. The webinar will be held on Thursday, August 20, at 1 p.m.
In late June, the NCUA announced its MBL proposal. The comment period began on July 1st. The proposal would remove nearly all requirements not in the Federal Credit Union Act, and would create a category of "commercial" loans for safety and soundness purposes and utilizes the category of MBLs for compliance with the Act's limitations on member business lending. For example, the Act does not categorize any nonmember participations as MBLs and neither does the proposed rule. However, business loan participations are considered commercial loans for the purposes of safety and soundness. The rule would also remove all of the specific requirements that currently require waivers, including the personal guarantee requirement. It would also exempt some CUs with less than $250 million in assets from the board of director and management responsibility requirements and commercial loan policy requirements. The proposal has an 18-month implementation period.
On the webinar, CUNA will also be seeking feedback from credit unions to help it develop and finalize its comment letter that will be submitted to NCUA. In providing feedback via the webinar or in a separate email, please consider the following questions:
- Do you believe that the switch from a prescriptive rule to a principle-based rule will provide you more flexibility in making business loans? Why or Why not?
- Will the adjustments in the calculations of loans that count for the MBL statutory cap assist your credit union in making more MBLs?
- Does the proposed rule provide you with sufficient clarity to know what will be required in your policies/procedures? How will the proposed rule affect your current lending practices/policies?
- Are you comfortable that your examiner will be able to examine your portfolio and policies utilizing a principle-based rule?
- Does the removal of the waiver process benefit your MBL program?
- Does the distinction between commercial loans and member business loans benefit your MBL program?
- Will your credit union need to create a credit risk rating system or credit grading system in order to comply with the proposed rule?
Your League's President John Murphy has called the proposal "an opportunity to help credit unions help small businesses. We are encouraged by the proposal and are supportive of what it seeks to accomplish."
To participate in this free webinar, please click here.
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