WASHINGTON-Nearly a month before the June 3 deadline, the American Bankers Association has submitted its comment letter to NCUA on the proposed member business lending regulation. In the first paragraph of the letter, ABA Executive Vice President Edward Yingling wrote, "ABA strongly opposes the proposed changes in NCUA's Member Business Loan ("MBL") rule and believes these proposed amendments are contrary to Congressional intent to limit business lending by credit unions." Yingling accused NCUA of stretching their authority to circumvent credit unions' statutory 12.25% of assets cap on member business loans. NCUA's proposal accomplishes this by altering the definition of a member business loan, not counting participations purchased under the cap, and allowing credit union service organizations to originate business loans, the official comment letter read. It would be possible for credit unions to exclude all business loans from the limitation if bought and sold among credit unions. "While the extreme is perhaps unlikely, any exclusion of these loans constitutes an underestimate of the business loan exposure and gives a false impression that the concentration limits imposed by Congress have been met," Yingling wrote. ABA argued that the proposed amendments are in conflict with safety and soundness and have no basis in fact. According to Call Report data from June 2002, banks reported 14.2 million small business and farm loans outstanding valued at $550 billion. Of those, 12.25 million were less than or equal to $100,000. "NCUA's proposed amendments to its MBL rule are counter to Congressional intent and evade the purpose of the statute through expansive definitions and exemptions. Congress in 1998 made it perfectly clear that credit unions should be focused on consumer lending, not commercial lending. However, this proposed rule would divert credit union resources to financing commercial enterprises, while relaxing safety and soundness regulation associated with member business loans," the letter concluded. -


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