More than Two Dozen Mich. CUs Accept LICU Designation (Misc News: September 13, 2012)
Twenty-seven federally charted credit unions in Michigan have accepted the NCUA’s offer to immediately get low-income designations which will allow the credit unions to accept supplemental capital and exempt them from the cap on member business lending.
Also, NCUA Chair Debbie Matz said that the federal agency is looking for ways to extend the streamlined LICU opt-in procedure to state-chartered credit unions.
Of the 1003 federal credit unions that were notified that they qualify for the low-income designation, 553 accepted the designation. Michigan had 44 credit unions that were on the eligibility list.
The LICU designation allows credit unions to accept supplemental capital and an exemption from the member business lending cap under certain circumstances.
LICU-designated credit unions are also eligible for Community Development Revolving Loan Fund grants and low-interest loans and may accept deposits from nonmembers.
Credit unions that have not yet responded NCUA notification have 30 days to do so, the agency said.
According to CU Times, Matz said she planned to meet with NASCUS President/CEO Mary Martha Fortney to discuss ways to initiate an LICU opt-in approval process similar to the one NCUA launched for federal credit unions.
Fortney told the industry newspaper that credit unions would be subject to the low-income program rules in their states and added that some states don’t even have low-income designations.
The NCUA streamlined the process of becoming an LICU by eliminating the application and approval process. Instead, it sent a letter to certain federally chartered credit unions letting them know that they qualify for the designation.
The LICU notification initiative was incorporated into a relief and recovery package for drought-stricken states announced at the White House in early August. Two hundred sixty of the credit unions that accepted their designation are headquartered in drought-impacted states.
The federal regulator projects this initiative could unlock between $250 million and half a billion dollars in new, near-term business lending if all qualified federal credit unions participate. The initiative could double the number of LICUs and increase their member business lending by nearly 75 percent.