MBL Waiver Process May Change
NCUA Board Chairman Debbie Matz said the agency might propose a rule in 2015 dealing with the member business lending waiver process.
“My intent in modernizing our member business lending regulation is to essentially remove all limits on MBLs except for those limits that are imposed by statute,” she told CU Times.
The proposal would eliminate the need for loan-by-loan waivers and blanket waivers on issues such as personal guarantees, loan-to-value ratios, and other underwriting criteria.
“So decisions on whether to require personal guarantees or minimum collateral on each MBL would be based on policies of each credit union,” Matz said. “These policies would be evaluated during the examination process, rather than restricted by regulation. These changes would be consistent with feedback I’ve received during my Listening Sessions and many other meetings with credit union officials around the country.”
Based on comments from credit union leaders in the Dakotas, Matz said she would suggest ending unnecessary restrictions on construction and development loans.
NCUA Board Member J. Mark McWatters said “liberalizing” the MBL waiver process is one of his top priorities in 2015.
“NCUA should undertake a progressive review of its MBL regulations so as to afford the credit union community a greater opportunity to extend job creating small business loans,” he said.
Matz said the NCUA is also considering raising the definition of small credit unions to above $50 million, which would exempt more credit unions from risk-based capital, interest rate risk and the liquidity rule.
“I’m not sure where we’ll wind up but as credit unions become more complex and larger, it gives us more of an opportunity to raise the threshold of what constitutes a small credit union,” Matz said.
The risk-based capital revised rule will be proposed at the agency’s Jan. 15 board meeting. Matz hopes the agency is able to finalize the rule within the year.
The NCUA is planning to finalize the fixed assets rule in 2015, which would require credit unions to put together a fixed-asset management plan instead of going through the existing waiver process.
In addition, the regulator is going to consider supplemental capital and field of membership changes depending on the recommendations from the agency’s working groups.
Metsger said field of membership issues is one of his top priorities in 2015.
“Chartering and expanding the field of membership of a credit union has become too complex and bureaucratic,” he said. “There are increasing inequities between state and federal charters and also between what is permitted as a result of a merger verses regulatory chartering and expansion. So, we need to bring greater consistency to the field of membership decisions and to simplify the process for credit unions.”
While the agency does not have the authority to change requirements that are set in statue, Metsger said the NCUA could simplify its own recommendations and encourage Congress to pass legislation that would remove unwanted barriers to credit union membership.
“I believe all consumers should have the ability to choose a not-for-profit cooperative, credit unions, as a financial services provider,” he said.