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MBL Guarantee Removal May Expose CUs to Violations

The proposed elimination of personal guarantees could potentially cripple underwriting and punish those credit unions that have not "excessively abused their privileges," a group of 15 member business lending CUSOs recently wrote.

By Michelle A. Samaad | Updated on May 11, 2010

The proposed elimination of personal guarantees could potentially cripple underwriting and punish those credit unions that have not “excessively abused their privileges,” a group of 15 member business lending CUSOs recently wrote to the NCUA regarding the elimination of some RegFlex privileges.

The Regional CUSO Alliance shared several concerns in an April 26 letter to the regulator, which has proposed eliminating four regulatory relief items under Regulation 742 for well-capitalized and well-run credit unions. The proposed personal guarantee elimination “seems to solve a problem that does not even exist” and “any changes may cause unintended consequences, either by severely limiting the competitive capability or by exposing credit unions to potential good faith violations of the core policy,” wrote RCA member Bill Beardsley, who is also president/CEO of the Michigan Business Connection, a business lending CUSO.

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