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ALEXANDRIA, Va.-At the NCUA Board’s October meeting last week, the board members approved a final rule to shape NCUA’s business lending rule to fit better with the Small Business Administration. According to NCUA Staff Attorney Frank Kressman, the proposed rule was “well received” by the 24 commenters and no substantive changes were made from the proposal. The changes came about from comments on an earlier rule to amend the member business lending rule, but was outside the scope of that rule at the time. The new final rule exempts SBA-guaranteed loans through credit unions from the NCUA’s member business lending rule collateral requirements. These loans will be viewed under SBA’s less restrictive collateral regulations. Federally insured state chartered credit unions are only exempt from the business lending rule if its state supervisory authority has adopted its own business loan rule. The final rule also clarifies that it applies to both SBA’s Certified Development Company (504) Loan Program and the Basic 7(a) Loan Program. “On the SBA rule, we asked that they apply the rule to the Farm Service Agency loans,” NAFCU Director of Regulatory Affairs Gwen Baker explained. During discussion at the meeting, NCUA Board Member Debbie Matz commented that she hopes the agency can draft a broader rule to apply to more guaranteed loan programs, such as ones at her former employer, the U.S. Department of Agriculture. One bank and four banking trade associations submitted letters during the comment period stating that the rule contradicts congressional intent to limit credit unions’ business lending authorities. NCUA Chairman JoAnn Johnson pointed out that the rule does not increase any limits set by Congress on credit union member business loans. SBA loan programs are “ideally suited to the mission of many credit unions and satisfying their members’ business loan needs,” Johnson concluded. The two board members were also presented with the quarterly insurance fund report. Year-to-date gross income was at $92.8 million, below the budgeted $94.9 million, mainly due to the low interest rate environment, NCUA Chief Financial Officer Dennis Winans explained. However, operating expense came in more than $8 million below projections and insurance losses $2 million below leaving the agency with a net income of $23.6 million for the year so far. This is well above the budget $15 million. Chiefly, the decline in operating expenses was due to the low employment situation at the agency. Winans also said that the agency will be changing its reserving method from looking at a 15-year history of the National Credit Union Share Insurance Fund to going just two years back, as the Government Accountability Office recommended in its 2003 report. “Just in my mind, we’re way over reserved,” he said. Finally, NCUA approved a final rule covering changes in officials or senior officers at newly chartered or troubled credit unions. The new rule clears up an inconsistency in the previous rule by eliminating allowing executives or officials to serve on a temporary basis prior to NCUA approval. A waiver system is still in place. [email protected]

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