SANTA FE, N.M. – Renewing her call on credit unions to start or expand business lending, NCUA Board Member JoAnn Johnson said the agency in the coming months will be looking at “bringing parity to federals and perhaps beyond” with state CUs on acceptable powers. “I can’t say now what that might be,” she told a Credit Union Times reporter after a speech to the annual conference of the National Association of Community Credit Unions. In her conference talk, Johnson applauded CUs for their heightened push for business loans stressing that this is an area for future growth as long as safety and soundness rules are met. Citing regulatory data, she said at the end of last year there were 1,545 CUs making business loans “which was only one more than in 1997″ and “29 less than in 1994,” underscoring the up-to-now passive interest in member business loans by the industry. She said those numbers are certain to climb this year as groups like NACCU push innovation in that area. The NCUA Director urged community CU executives to “get the message out” to lawmakers to make it clear that MBLs made by CUs are in small in size. “These are not loans made for shopping malls or commercial projects” underwritten by commercial banks, she said. The average MBL as represented by the 1,545 CUs making the loans at the end of 2001 was $88,000. “We’re talking loans for the fleet of vehicles, the little shop, the entrepreneur,” she said adding that MBLs are certainly “not right for every credit union” since this is “new territory.” During a question and answer session, NACCU Director Marc Shaefer, president of Truliant FCU in Winston-Salem,N.C., recounted examiner scrutiny on business loans at his shop and asked Johnson if there were any formal program, under way at the agency “to bring them up to speed” on MBLs. Johnson responded that “there is a learning curve” for examiners and that “there have been a couple of minor concerns,” but it is hoped time would and experience would solve the problem. In an earlier speech to the NACCU, Deborah Matz characterized the MBL examiner issue as one of a “culture change” (CU Times, Oct. 30). In another area, Johnson singled out the Credit Union Association of Oregon for bringing key issues to the attention of the NCUA and a recent “discrepancy” over real estate appraisals on MBLs was cleared up as a result of a record being “mis-stated.” The problem centered on CUs being required to do appraisals on real estate of $50,000 value while the bank guideline was $250,000. The problem is now fixed thanks to CUAO bringing it to board’s attention.

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