An alliance of member business lending CUSOs that serves nearly500 credit unions recently met to weigh in on industry challengesincluding possible regulatory threats that could impact theirefforts.

The Regional CUSO Alliance said it came together May 1-2 in AnnArbor, Mich., to promote a business lending model that emphasizeslocal loan originations.

There was also dialogue on the concerns with large credit unionsand CUSOs and originating loans across a national platform andthose that engage in activities that are highly concentrated inspecialty industries.

While individual models within RCA CUSOs differ, all said theyshared the belief that limiting their activities primarily to amanageable ownership and subscriber structure within a definedgeographical region are important to assisting credit unions inachieving their objectives and in building MBL operationalinfrastructure.

“It was a super turnout, and great dialogue. I think theregulatory, economic and industry political threats facing ourmodel and our credit unions created extra resolve to participate,”said Bill Beardsley, president of Michigan Business Connection and the event's host CUSO, in astatement.

The group also discussed the recent NCUA proposal to limitloan participations and agreed that the regulator's concernsrelated to systemic risk associated with loan participations aremitigated by developing strong origination and due diligenceprocesses within credit unions and also by targeted marketingefforts to a credit union's existing field of membership.

The RCA said loan participations are a critical factor amongst mostregional credit unions and serve as a tool to diversify andmitigate concentration risk.

“The current NCUA proposal would threaten the viability ofseveral of the CUSOs and prevent some of their credit unions fromcontinuing their current lending programs. The group agrees thatthe lack of understanding of the regional CUSO participation modelis one of the most significant threats facing the CUSOs,” the RCAsaid.

Officials from the NCUA attended the meeting to discuss thecurrent CUSO and participation proposals and how those could impactefforts to strengthen credit union lending programs, according tothe RCA. In addition, the CUSOs were provided with best practiceinformation from the NCUA on underwriting content, process and riskmanagement protocols.

Representatives with the National Association of Credit UnionSupervisors also attended to talk about the importance of CUSOsmaking sure that the credit unions they serve understand and managethe risks of their lending activities, regardless of the servicesprovided by the CUSO.