Two members of Congress from California said this week they will be co-sponsors of legislation that would raise the cap on member business loans at credit unions from 12.25% of assets to as much as 27.5% of assets.
Sen. Dianne Feinstein (D-Calif.) became the 20th cosponsor of legislation sponsored by Sen. Mark Udall (D-Colo.) And Rep. Darrell Issa (R-Calif.) became the 58th cosponsor of companion legislation sponsored by Rep. Ed Royce (R-Calif.).
The legislation would allow eligible credit unions to increase their small business lending to 27.5% of total assets, at a rate of growth not to exceed 30% a year.
Credit unions must be well-capitalized, be at or above 80% of the current cap, have five or more years of member business lending experience and be able to demonstrate sound underwriting and servicing. If a credit union’s net worth ratio falls below the well-capitalized requirement (currently 7%), it would have to stop making new business loans.
The Senate Banking Committee held a hearing on the measure last month, at which NCUA Chairman Debbie Matz endorsed the measure and said the agency would enact adequate regulatory safeguards to minimize the risks to the NCUSIF.