WASHINGTON (5/28/10)--Legislation that would lift the cap on member business lending (MBL) for credit unions could see congressional action soon after the Treasury this week said it “could support proposals to increase credit union [MBL] provided safety and soundness concerns are addressed” and forwarded its own MBL proposal to the hill. Commenting on the Treasury proposal, the Credit Union National Association's (CUNA) Senior Vice President of Legislative Affairs John Magill said that CUNA has been "working on this language for months with Senators and Treasury officials, and we are very pleased that this seems to be moving forward." Rep. Paul Kanjorski (D-Penn.) and Sen. Mark Udall (D-Colo.), in their respective congressional bodies, have introduced legislation that would lift the MBL cap. The Treasury’s comments came in the form of a letter to House Financial Services Committee Chairman Barney Frank (D-Mass.), wherein Treasury Secretary Tim Geithner said that the Treasury would work with Congress and would seek to ensure that any MBL reforms “are not done in a way that inappropriately introduces more risk to credit union members, the credit union system, the National Credit Union Share Insurance Fund, or the financial system as a whole.” CUNA has estimated that lifting the MBL cap to 25% of a credit union’s assets would create over 100,000 new jobs and inject over $10 billion in funds into the economy, at no cost to taxpayers. The Treasury’s proposed legislation would establish a maximum MBL limit of 27.5% of a credit union’s total assets. The proposal also states 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 National Credit Union Administration would also be granted the authority to “set rules creating intermediate [MBL] limits and to require approval before any credit union can move to the next higher limit.” The Treasury also called on the NCUA to “be vigilant and carefully oversee implementation” of the MBL program by reporting on MBL “activity and loan performance.” The Obama administration earlier this month voiced support for raising credit unions' business lending capacity, and House Financial Services Committee Chairman Barney Frank (D-Mass.) said his committee would consider an administration proposal to that effect--in a markup--"fairly soon." That markup has not yet been scheduled.