NAFCU hails Royce-McCarthy MBL bill

Feb. 15, 2013 – NAFCU President and CEO Fred Becker on Thursday hailed the introduction by Reps. Ed Royce, R-Calif., and Carolyn McCarthy, D-N.Y., of H.R. 688, a credit union member business lending bill that seeks anew to facilitate an increase in the MBL cap to a maximum 27.5 percent of assets for eligible institutions.

“We appreciate Reps. Royce’s and McCarthy's continued commitment to and confidence in credit unions and their ability to help small business,” said Becker. “We thank them and the other original cosponsors of this legislation. The time is right for this bill. It is a jobs bill, plain and simple, and will help invigorate our country’s economy by spurring much-needed lending to small businesses – our nation’s job creators.”

Winning greater MBL authority for credit unions is a key piece of NAFCU's five-point plan for credit union regulatory relief, released Tuesday.

Royce and McCarthy offered substantially similar legislation last Congress as H.R. 1418, which drew 144 cosponsors. H.R. 688, the "Credit Union Small Business Jobs Creation Act," has 34 original cosponsors. The bill would allow the NCUA Board to approve an application by an insured credit union for a 27.5 percent MBL cap if they meet certain conditions:

  • the credit union has met at least 80 percent of its current cap for the past four consecutive quarters;
  • it is classified as “well capitalized”;
  • it can demonstrate at least five years of experience of sound underwriting and servicing of MBLs;
  • it has the requisite policies and experience in managing MBLs;
  • it has satisfied other standards which the NCUA Board “determines are necessary to maintain the safety and soundness of the insured credit union.”

The new bill also retains the earlier proposed cap on growth in MBL portfolios of no more than 30 percent a year for credit unions authorized for the higher cap. Any credit union approved for the higher cap would be restricted from making any new MBLs for any period in which it drops below “well capitalized.” NCUA would be free to set additional limitations on growth as well.

The bill would require the NCUA Board to issue proposed rules within six months after enactment. It also calls for two reports to Congress within three years of enactment. (See related story.)

NAFCU is helping to garner additional cosponsors and urges its members to join in that effort. Take action now.