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MBL amendment could be offered for Senate jobs bill today
WASHINGTON (6/30/10)—The U.S. Senate voted Tuesday to proceed on a bill intended to stimulate small business lending in communities, H.R. 5297, the Small Business Lending Fund Act. Sen. Mark Udall (D-Colo.) is expected today to offer a Credit Union National Association (CUNA)-supported amendment to the package that would increase the credit union member business lending cap to 27.5% of assets, up from 12.25%. In an Action Alert issued yesterday, CUNA President/CEO Dan Mica asked league presidents to mobilize quickly to urge Senate members both to back the possible MBL amendment, and to keep fighting enactment of a provision in the financial regulatory reform bill that would require government price setting of interchange fees. Timing of the consideration of the Udall amendment is complicated both by memorials for Sen. Robert Byrd, who died early Monday, as well as the expected debate of the Regulatory Restructuring Conference Report and other business pending before the Senate. While it is possible that the Senate will complete consideration of the amendment this week, CUNA believes it is more likely that the amendment will remain pending through the Independence Day District Work Period. Udall, who has supported credit union efforts to increase member business lending as a way to improve credit availability for small businesses, earlier this year drafted a stand-alone MBL bill that would have raised the MBL cap to 25% of assets. A similar bill was introduced by Reps. Paul Kanjorski (D-Pa.) and Ed Royce (D-Calif.) in the House. However, in moving to add the credit union provisions to the larger job-stimulus package, Udall is expected to offer an amendment reflecting a U.S. Treasury-backed proposal to increase MBLs to 27.5% of assets, which that agency sent to Capitol Hill this month. In addition to more than doubling the current cap, the Udall amendment also may propose that the growth of a given credit union's MBL portfolio may be no more than 30% annually; credit unions that wish to lift their MBL cap must be well capitalized, must be lending at a ratio near the current cap for the previous four quarters, must have a minimum of five years of underwriting and servicing MBLs, and ; must demonstrate sufficient experience in managing these types of loans. The Senate small business bill--to which the MBL language may be added--also proposes a government-backed $30 billion fund intended to enhance the ability of small banks to lend to customers who own small businesses. CUNA has estimated that lifting the MBL cap—even just to 25% of assets--could create over 100,000 new jobs and inject over $10 billion in funds into the economy, however, at no cost to taxpayers. The House earlier this month voted 241-182 in favor of a bill to provide the community bank funds, but the House bill did not address credit union MBL authority. The House could adopt the Senate version of the bill during conference committee proceedings conducted to work out differences in the two chambers’ bills. Prior to the Senate’s possible action today, the National Association of Realtors wrote on behalf of 1.1 million NAR and associates members reiterating support for the MBL increase. In a letter sent to every senator, the NAR wrote that the MBL increase for credit unions would allow “these community-focused financial institutions to play a more significant and much needed role in our nation’s economic recovery.” The letter did note opposition, however, to the administration’s proposal to require credit unions to have at least five years of MBL experience in order to qualify for the higher limit. “This would unfairly prevent credit unions that have proven to be well-capitalized and ready to lend to the small business community from participation,” the NAR letter noted. The NAR is one of more than a dozen national business organizations that have publicly supported increased member business lending for credit unions.
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