MBL and Supplemental Capital Legislation Introduced

Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) yesterday re-introduced an ABA-opposed bill (H.R. 688) that would raise the member business-lending cap for certain credit unions from 12.25 percent to 27.5 percent of total assets.

The legislation would raise the cap for well-capitalized credit unions that have member business loans outstanding at the end of each of the four consecutive quarters immediately preceding their application date; can demonstrate at least five years experience soundly underwriting and servicing such loans; and have the requisite policies and experience in managing them. Credit unions also would have to satisfy other standards that the National Credit Union Administration Board determines are needed to maintain their safety and soundness.

Also, Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.) yesterday re-introduced a bill (H.R. 719) that would permit the National Credit Union Administration to allow qualified credit unions to accept supplemental capital. The legislation would require such capital to be uninsured and subordinate to other claims against a credit union. The measure also would authorize the NCUA to set maturity limits on it.