NCUA proposal rejected by bankers

WASHINGTON – Community bankers last week rejected a National Credit Union Administration proposal that would expand credit union business lending capabilities, effectively increasing competition with banks.
The NCUA proposed changes to its commercial lending rules includes language allowing members to borrow without personally guaranteeing loans, placing a collateral cap at 80 percent loan-to-value and increases the amount of loans allowed to individual borrowers.
Camden R. Fine, president and CEO of the Independent Community Bankers of American, last week rejected a proposed rule changes, saying in a statement that the proposed rule would “widen federal, state and local budget deficits and increase risks to our financial system while doing little to improve access to credit.”
“ICBA and the nation’s more than 6,000 Main Street community banks continue to vigorously oppose the tax-subsidized credit union industry’s campaign to extend its government-funded competitive advantage over taxpaying community banks,” Fine said. “Congress enacted credit unions’ business-lending caps for good reason – to limit risky lending and to restrict these tax-exempt institutions to their fundamental mandate of serving people of modest means.”
The NCUA says its supervision of business lending has “largely been successful,” and that business loan portfolios at credit unions nationwide have nearly quadrupled in size during the last decade, today totaling about $51 billion, according to its summary of proposed changes.
“The proposed [Member Business Loan] rule will provide federally insured credit unions making business loans with greater flexibility and more autonomy, shifting the rule’s focus from the current prescriptive approach to a more principle-based methodology that emphasizes sound risk management practices for commercial lending,” according to the NCUA.
The NCUA proposed the new rules during a board meeting on June 18.

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