NEW ORLEANS — A number of regulatory issues in business lending were up for discussion during a session that spilled over into areas of examiner qualifications and waiver use.
On the panel were Roger Little, Office of Financial and Insurance Services Michigan Deputy Commissioner and a NASCUS board member, Katherine Weber, partner, Messick & Weber, PC, and Frank Kressman, staff attorney, NCUA Office of General Counsel.
Weber mentioned the NACUSO comment letter sent to NCUA on Part 723, which covers the regulation of member business loans. NCUA has a policy of continually reviewing its regulations to determine whether they should be updated, clarified, simplified, or eliminated. Every year, NCUA examines one-third of its regulations as part of this annual rule review process. Weber said NACUSO has asked NCUA to consider raising the minimum on business loans from $50,000 to $100,000, increase the minimum equity for constructions loans and address conflict of interest in CUSO underwriting with CUSO owners versus non-owners.
There was also discussion and questions on loan participation use as they relate to waivers. Kressman mentioned the progress credit unions have made using the Small Business Administration's loan program adding the agency's "more generous terms" have been beneficial. Kressman also touched on closed and open-ended student loans and credit unions' use of them.
Little gave an overview of CUSOs and their relationships with state-chartered credit unions in Michigan. For instance, a credit union can make a combination of loans and investments that do not exceed 6%. While Michigan credit unions can apply for a waiver above that limit, Little said that has yet to occur. An alliance with a CUSO can also help extend services, he offered.
"The idea of having CUSOs doing big lending makes a lot of sense," Little said. "We see some credit unions that come up short and need substantial investment in infrastructure and expertise. Aggregating resources can help alleviate this."
At one prolonged point during the session, the discussion shifted to examiners and what they are looking for during audits. One attendee had questions about the criteria and experience examiners are required to have while a few others chimed in on some overzealous ones that are "going after the wrong ones."
–msamaad@cutimes.com
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