Why the Delay in Adopting a Tiered MBL Approval Process

Dear Chairman Matz:

Several weeks ago, you wrote Treasury Secretary Geithner that if credit unions were granted expanded member business lending (MBL) authority for credit unions, you would tighten the regulation of business lending of credit unions.

One of your recommendations was that NCUA would only allow credit unions to gradually increase their member business lending capabilities by adopting a tiered approval process.

However, the Federal Credit Union Act already exempts two classes of credit unions from the aggregate business loan of 12.25 percent of assets:
• credit unions that are chartered for the purpose of making or a history of primarily making member business loans to its members; and
• credit unions that predominately serve low income members or are community development financial institutions.

These institutions can already exceed the aggregate cap and there are no limitations on how aggressively they can expand their business loan portfolio.

If you think there is a need for a tiered approval process with regard to increased business lending by credit unions, why then has NCUA not proposed changes to its regulations that would only allow these credit unions to gradually increase their business lending authority through a tiered approval process?