CUs Get More Business-Lending Authority, but Raising the MBL Cap is Still Critical (Misc News: September 19, 2012)
Recent regulatory changes on business lending and investing will allow credit unions to help more businesses, but MCUL & Affiliates and CUNA continue to press Congress to approve raising the cap on member business lending. Help from credit union leaders is still critical to get the measure to come to a vote.
On Sept. 13, NCUA issued an opinion letter saying that it was expanding the definition of "fleet" of vehicles, as used in its member business lending rule, to mean five or more vehicles, an increase from two. The previous rule was overly restrictive and the revision better reflects "marketplace realities" and provides regulatory relief to credit unions, enabling them to more effectively serve the business needs of their members, NCUA said.
The change in the fleet rule is just the latest regulatory change that will help credit unions make more loans to help small businesses.
Last month, NCUA sent letters to 1,003 federally charted credit unions telling them that they were eligible to become low-income credit unions. Instead of filling out forms and providing documentation supporting the LICU designation, all they had to do was send a letter to the NCUA accepting it. Among other benefits, the LICU designation carries with it a waiver of the 12.25 percent cap on member business lending. Five hundred fifty-three credit unions, 27 of them in Michigan, have accepted the low-income designation.
And in Michigan, OFIR ruled last month that certain credit unions can make equity investments in businesses. While not a loan, this investment could provide critical capital for small businesses.
MCUL & Affiliates CEO David Adams said that all of those recent regulatory changes have been good news for credit unions and small business, but raising the MBL cap would allow credit unions to do even more.
“Changes in the fleet rule, low-income credit union designation and business equity investments are all great news for credit unions,” Adams said. “But raising the statutory cap on member business lending is still a critical battle for the movement.
“Credit unions have money to lend and want to do more to help small businesses,” he said. “We need credit union supporters to continue pressing members of Congress to sign on as cosponsors or at least commit to a ‘yes’ vote when the measure comes up for a vote.”
Nine of the 14 members of the Michigan delegation to Congress have already signed on as cosponsors of the legislation. Only Republicans Justin Amash, Dan Benishek, Dave Camp, Mike Rogers and Mark Wahlberg have not signed on as cosponsors. Both Michigan senators, Carl Levin and Debbie Stabenow, are cosponsors.
Click here to visit the MCUL’s Grassroots Action Center where you can send a letter to Levin or Stabenow thanking them for their support of raising the MBL cap. Click here to send a letter to your representative in Congress, either asking him to cosponsor or thanking him or her for the support.
Regarding the new fleet definition, CUNA News Now reported that in reviewing how best to define a fleet, NCUA said it evaluated case law, how other government agencies use the term and auto industry standards. NCUA Associate General Counsel Frank Kressman, who wrote the opinion, said the agency was "particularly persuaded" by Internal Revenue Service publications on the topic and treatment of fleets by auto industry fleet programs.