Johnson Pushes MBL Initiatives for Near-Future NCUA Board Meeting

WASHINGTON-NCUA Vice Chair JoAnn Johnson laid out three of maybe a dozen provisions to be included in the highly anticipated update to the agency’s member business lending rule during a CUNA Governmental Affairs Conference general session. Johnson’s proposal, among other things, will: * Exclude the purchase of a business loan participation interest from the purchasing credit union’s member business loan limit and clarify that loans sold without recourse will not count as member business loans. * Extend the standard prompt corrective action risk-based net worth component that presently divides the portfolio of member business loans to three tiers. Instead of being risk-weighted at 6% to 12.25% of assets and 14% above that as is the current rule, the proposal will include three tiers: member business loans to 15% of assets risk weighted at 6%; over 15% and less than or equal to 25% risk weighted at 8%; and above 25% risk weighted at 14%. * Exempt member business vehicle loans from the 80% financing requirement and permit 100% financing similar to consumer car loans. Johnson first revealed that her working group was looking into the first two provisions in a Jan. 1 Credit Union Times story in which she also said the group was reviewing whether CUSOs could make member business loans. She noted that NCUA’s effort is in line with President George W. Bush’s plan to strengthen small business for economic growth and to create new jobs. “Credit unions are a perfect ally to assist small businesses with their financing and deposit services needs,” Johnson remarked. “With a focus on members’ small business lending, credit unions can play a pivotal role in helping to reinvigorate the U.S. economy.” At the GAC, Johnson said she expects the member business lending regulation proposal to come before the board during its March 27 meeting.