Representative Jeff Miller (R-Fla.) introduced a bill (H.R. 5061) that would exclude business loans to veterans from the definition of a member business loan (MBL). As a result, these loans would not count against a credit union's aggregate member business lending (MBL) cap of 12.25 percent of assets.
Credit union advocates have been quick to applaud the bill, because they are eager for any legislation that would facilitate credit union efforts to make more business loans and evade the aggregate MBL cap.
However, excluding business loans to veterans from the definition of MBL does not seem to fit the current list of exclusions to the MBL definition -- loans of $50,000 or less, loans guaranteed by governmental agencies, and loans secured by primary residence or deposits.
The current exclusions from the MBL definition pose minimal safety and soundness risk to credit unions and the National Credit Union Share Insurance Fund (NCUSIF) by limiting the size of the loss on a defaulted business loan.
The same cannot be said for H.R. 5061.
While the cause of this bill may be noble, H.R. 5061 potentially increases the risk of loss to the NCUSIF, as these veteran business loans are no longer subject to NCUA's MBL regulations.
Read the bill.
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I cannot imagine that you are against supporting those men and women who defended our country with an opportunity to affordable money to create and/or expand a business. Hard to do on credit card interest rates that some TBTF banks offer as business loans.
ReplyDeleteI'm not against credit going to people serving our country. I was pointing out it did not fit with the current list of exclusions.
ReplyDeleteIf you want the credit union charter to be used for social policy, that is fine with me.
On by the way, if you care so much about the men and women who defend our country, then you should give up your tax exemption.
Let's make a deal. Credit unions give up their tax exemption and get all banking powers and bankers give up the SubS authority. Then that would truly be equal footing.
ReplyDeleteYou'd also need to give CUs access to any consumer anywhere, a wider variety of investment options and access to alternative forms of capital.
ReplyDeleteKeith's handlers don't want that. They want CUs to remain restricted but also taxed.