First, CUNA requested:
"All the regulatory requirements for MBLs that are not specifically stated in the FCU Act, such as the requirement for the personal guarantee of the borrower(s), loan-to-value ratios, construction and development loan limits, appraisal requirements, and others should be eliminated for well-managed, well-capitalized credit unions that operate successful MBL programs."CUNA proposed that NCUA should "let well-run, well-capitalized credit unions determine what those limits and ratios should be, consistent with agency guidance and reasonable industry standards."
In other words, CUNA wants NCUA to re-establish its regulatory flexibility program, which the agency recently abolished.
Moreover, credit unions were probably well-served by these limits. For example, loan limits on construction and development loans probably insulated the National Credit Union Share Insurance Fund from severe losses by keeping credit unions from becoming over-exposed to construction and land development loans, which had high default rates after the collapse of the real estate bubble.
In addition, CUNA urged NCUA to revisit the history of primarily making business loan exemption. In 1998, Congress exempted credit unions that had a history of primarily making member business loans from the aggregate member business loan cap.
CUNA claims that NCUA should use a more contemporaneous time period for determining whether a credit union has a history of primarily making business loans. If MBLs are currently among the highest of a credit union's loan categories, then CUNA reasons that the credit union has a history of making business loans.
However, this provision was meant to grandfather those credit unions that had a history of primarily making member business loans from the aggregate business loan cap, when the Credit Union Membership Access Act became law in 1998. Once the aggregate MBL cap became effective, a non-exempt credit union should never make enough MBLs so as be engaged in primarily making member business loans.