MBL Examiners' Guidance posted by NCUA

Nov. 30, 2016 (Updated) -- Examiners’ guidance for NCUA’s new member business loan (MBL) rule was opened to the public Wednesday as part of the agency’s online examiners guide, according to a “Letter to Credit Unions” from Board Chairman Rick Metsger.

In LTCU 16-CU-11, Metsger noted that the new rule (which takes effect Jan. 1, just five weeks away) “is designed to provide greater flexibility to credit unions to meet the needs of their members through prudent risk-management practices.” He also noted that the agency continues to emphasize that credit unions which engage in commercial lending activities “need to have the people, processes, and policies in place to ensure the safety and soundness of their operations.”

Metsger stated that the examiner guidance – considered critical by credit union practitioners and supervisors in how the agency will approach the new “principles-based” rule -- “will help credit unions understand NCUA’s supervisory expectations for sound commercial risk-management practices.”

Although the new rule takes effect in January, its implementation has been challenged by a bankers’ group (the Independent Community Bankers of America (ICBA)), which has asked a federal court to invalidate and set aside a provision the new rule that allows federally insured credit unions to exclude purchased commercial loans or participations in such loans from the aggregate cap on MBLs. NCUA has responded to (and discounted) the bankers’ complaint, as have the two largest national credit union trade groups (Credit Union Natl. Assn. and Natl. Assn. of Federal Credit Unions).

NASCUS will be reviewing the guidance over the next few day, and ultimately develop a summary.


NCUA LTCU 16-CU-11: Member Business Loans Guidance Added to Examiner's Guide

Examiners' Guide: Commercial and Business Loans