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JEFFERSON CITY, Mo. – Since the rules are quite parallel, the Missouri Division of Credit Unions will soon repeal its member business lending rules for state-chartered credit unions here to follow NCUA’s regulations. The state regulator announced that it is withdrawing its MBL rules and credit unions will soon follow the guidelines put in place by the NCUA, said Sandra Branson, director of the division of credit unions at an Oct. 20 meeting of the Missouri Credit Union Commission. The move, which will be transparent to Missouri’s credit unions, has been desired by the industry for some time, Branson said. “The industry has wanted the state to follow NCUA’s regulations. They’re pretty parallel,” Branson said, adding credit unions would continue to follow the state rule for the next five to six months and then adhere to NCUA’s rules. In July 2004, NCUA issued an opinion letter to the Missouri Division of CUs clarifying NCUA’s position that federally-insured state-chartered credit unions may only engage in business lending under the terms of NCUA’s MBL regulation or a state member business lending regulation approved by the NCUA Board. “Our view is that state law parity provisions do not provide a legal basis for federally-insured state credit unions to elect to engage in business lending under some provisions of NCUA’s regulation while relying on other provisions of a previously approved state regulation,” NCUA said at the time. “In addition to circumventing congressional intent, such a self-directed, piecemeal approach to regulation raises safety and soundness concerns as well as supervisory problems both for NCUA and state regulators.” In December 2004, NCUA approved changes to Missouri’s MBL rule by including a waiver process, a more liberal definition of aggregate MBL limit and relaxation of the requirement to obtain personal guarantees as security. Missouri’s MBL rule has been in effect since 2000, Branson said. One unique aspect of Missouri’s rule allowed credit unions to make MBLs to each other. At the time, nearly a dozen states, including Texas, were rewriting their MBL rules. Of the 156 state-chartered credit unions, 15 have MBLs in their portfolios as of June 30, Branson reported. The average MBL in Missouri is $115,502 with nearly $26 million in total business loans, according to data from CUNA Economic & Statistics, FDIC, NCUA and U.S. Census Bureau. Credit unions only have 0.04% of the business lending market share compared to nearly 100% for banks. Missouri’s banks have roughly $65 billion in business loans. “It would be more efficient for our office because (before) if we wanted to make any changes, they would have to be approved by NCUA” which can be a lengthy process, Branson said. All federally-insured, including state-chartered credit unions, must comply with the federal statute’s limitations on MBLs and any interpretations of the statute issued by the NCUA Board, the agency wrote last summer. – [email protected]

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