WASHINGTON — Sen. Rand Paul (R-Ky.) said Monday he would cosponsor legislation that would raise the cap on member business loans.
He didn’t mention the issue in his speech during NAFCU’s Congressional Caucus at the Mayflower Hotel, instead of focusing on broader budget and spending issues, but announced his support for the measure in response to a question from the audience.
Paul said he had always supported raising the cap and checked with his staff and that had been an oversight that he hadn’t signed on to the measure yet.
Legislation is pending in both the House and Senate that that would increase the cap on member business loans from 12.25% to 27.5% of assets.
In the House, a bill by Reps. Ed Royce (R-Ca.) and Carolyn McCarthy (D-N.Y.) has 62 cosponsors in the 435-member chamber. In the 100-member Senate, a companion bill by Sen. Mark Udall (D-Colo.) has 21 cosponsors following Paul’s announcement.
Both bills require that 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.
During his speech, Rand said Congress has to make serious progress towards tackling entitlements if the country is going to solve its long-term debt problem.
Paul, who was elected to the Senate last year, was supported by several credit union organizations during his campaign.