Does NCUA Understand the Meaning of No?

An article in the San Diego Business Journal, “Credit Unions Making Business Loans,” wrote about San Diego credit unions seeing an increase demand for business loans. "You will need to search for the article title."

To accommodate the ability of credit unions to do more business lending, credit union regulators have approved some credit unions to exceed the statutory aggregate business loan cap of 12.25 percent of assets.

For example, United Services of America (USA) FCU has been granted a regulatory waiver to make up to 20 percent of its assets into business loans.

California Coast Credit Union, with $1.8 billion in assets, is permitted to exceed the 12.25 percent cap on business loans – going up to 18 percent of its assets.

How can this be?

The Federal Credit Union Act clearly states that no insured credit union may make any member business loan that would result in a total amount of such loans outstanding at that credit union that would exceed 12.25 percent of assets. An exception was made for:

(1) an insured credit union chartered for the purpose of making, or that has a history of primarily making, member business loans to its members, as determined by the Board; or
(2) an insured credit union that (A) serves predominantly low-income members, as defined by the Board; or (B) is a community development financial institution, as defined in section 103 of the Community Development Banking and Financial Institutions Act of 1994.

As far as I can tell, neither credit union qualifies for an exception nor does the Federal Credit Union Act grant credit union regulators the discretion to waive this requirement.

So, what is it about the word “NO” that NCUA does not understand?