An alliance of member business lending CUSOs that serves nearly 500 credit unions recently met to weigh in on industry challenges including possible regulatory threats that could impact their efforts.

The Regional CUSO Alliance said it came together May 1-2 in Ann Arbor, Mich., to promote a business lending model that emphasizes local loan originations.

There was also dialogue on the concerns with large credit unions and CUSOs and originating loans across a national platform and those that engage in activities that are highly concentrated in specialty industries.

While individual models within RCA CUSOs differ, all said they shared the belief that limiting their activities primarily to a manageable ownership and subscriber structure within a defined geographical region are important to assisting credit unions in achieving their objectives and in building MBL operational infrastructure.

“It was a super turnout, and great dialogue. I think the regulatory, economic and industry political threats facing our model and our credit unions created extra resolve to participate,” said Bill Beardsley, president of Michigan Business Connection and the event's host CUSO, in a statement.

The group also discussed the recent NCUA proposal to limit loan participations and agreed that the regulator's concerns related to systemic risk associated with loan participations are mitigated by developing strong origination and due diligence processes within credit unions and also by targeted marketing efforts to a credit union's existing field of membership.

The RCA said loan participations are a critical factor amongst most regional credit unions and serve as a tool to diversify and mitigate concentration risk.

“The current NCUA proposal would threaten the viability of several of the CUSOs and prevent some of their credit unions from continuing their current lending programs. The group agrees that the lack of understanding of the regional CUSO participation model is one of the most significant threats facing the CUSOs,” the RCA said.

Officials from the NCUA attended the meeting to discuss the current CUSO and participation proposals and how those could impact efforts to strengthen credit union lending programs, according to the RCA. In addition, the CUSOs were provided with best practice information from the NCUA on underwriting content, process and risk management protocols.

Representatives with the National Association of Credit Union Supervisors also attended to talk about the importance of CUSOs making sure that the credit unions they serve understand and manage the risks of their lending activities, regardless of the services provided by the CUSO.

Instant Insights /

Member Business Lending CUSOs Convene to Talk on Pressing Concerns

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