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Udall introduces MBL bill in Senate
WASHINGTON (3/9/11)—A bill introduced Tuesday in the Senate to increase the member business lending (MBL) cap for credit unions could bring 140,000 new jobs and $13 billion of new small business lending into the economy, according to updated figures from the Credit Union National Association (CUNA). The economic benefits, CUNA underscores, come at no cost to taxpayers.
Click to view larger image Sen. Mark Udall (D-Colo.) addresses the audience of the CUNA 2011 GAC last week, at which more than 4,000 credit union representatives participated. Udall noted his intention to reintroduce MBL legislation at the GAC. (CUNA Photo)
CUNA President/CEO Bill Cheney thanked Sen. Mark Udall (D-Colo.) for his introduction yesterday of legislation ((S.509) that would establish a maximum MBL limit of 27.5% of a credit union's total assets. Cheney said, “Economic conditions may be improving, but the nation is still in need of more jobs, and small businesses are still in search of affordable and accessible options for capital. Credit unions can help on both fronts.” Udall sponsored an MBL-increase bill last year, but when Congress adjourned without having taken action on it, it became procedurally necessary to reintroduce the bill in the new 112th Congress. Cheney noted, “Unlike last year’s legislation that handed community banks $30 billion to make new loans, Sen. Udall’s bill will spur more small business lending by credit unions without burdening U.S. taxpayers or creating a new federal program.” “Raising the statutory cap is a no-cost way to free credit unions to do more of what they are doing now: making safe and responsible loans to help their members start or grow their small businesses. After focusing last year on the banks, it is time for Congress to pass Sen. Udall’s common-sense small business lending bill and recognize that credit unions want to be, ought to be, and deserve to be part of the solution,” the CUNA leader said. Under provisions of the new Udall bill, substantially similar to the 2010 legislation, 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 above the current level of 12.25% of total assets 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, under the Udall plan. The National Credit Union Administration (NCUA) also would 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 bill calls on the NCUA to "be vigilant and carefully oversee implementation" of the MBL program by reporting on MBL "activity and loan performance." The language of the Udall bill closely reflects language drafted by the U.S. Treasury Department last year and endorsed by the Obama administration. Prior to the bill’s introduction, CUNA sent a letter of support to Udall and his co-sponsors, Sens. Olympia Snowe (R-Maine) and Charles Schumer (D-N.Y.), which also urged their Senate colleagues to pass the MBL cap increase. (See related story: CUNA urges senators for MBL bill support; thanks leaders) Original co-sponsors of the bill also include Sens. Barbara Boxer (D-Calif.), Sherrod Brown (D-Ohio), Susan Collins (R-Maine), Al Franken (D-Minn.), Kirsten Gillibrand (D-N.Y.), Patrick Leahy (D-Vt.), Joseph Lieberman (I-Conn.), Bill Nelson (D-Fla.), Jack Reed (D-R.I.), Sheldon Whitehouse (D-R.I.), and Ron Wyden (D-Ore.). Last week Udall made known his intentions to reintroduce the MBL increase at CUNA’s Governmental Affairs Conference, at which more than 4,000 credit union representatives were present. Many of those representatives made personal visits to Capitol Hill to advocate to lawmakers on behalf of increased MBL authority to increase jobs and provide more capital for small business, as well as other key credit union issues. Also at the GAC, Rep. Ed Royce (R-Calif.), a House champion of MBL legislation, said he intends soon to re-introduce a bill to increase the cap in that chamber.
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