Newsroom

July 01, 2015

Fazio discusses NCUA's MBL priorities in webcast

Larry Fazio, the director of NCUA's Office of Examination and Insurance and the architect of the agency's proposed member business lending rule changes, talked about NCUA's "cultural shift" on the subject and the history of MBLs in credit unions during a free NAFCU webcast Wednesday.

"Credit unions have become more and more suited to serve small businesses," Fazio said. He also noted that the growing number of small businesses started by retirees is a good example of an MBL recipient served by credit unions.

Fazio said there has been a "fairly significant" increase in the volume of credit union business lending in the past decade. Of credit unions with $500 million in assets or more, 90 percent are involved in MBLs now, up from 72 percent 10 years ago, he said.

Fazio also noted that credit union MBL delinquency rates during the financial crisis were "much higher" than those of other loan types, peaking at 4.1 percent. But he said NCUA has undergone "a bit of a cultural shift" on MBLs and that the consensus is: "Business lending is good for credit unions if done correctly – it just needs to be done correctly."

The proposed rule would eliminate the MBL waiver process and allow credit unions to independently decide whether to require a personal guarantee on a commercial loan. NAFCU has advocated for MBL reform and supports the proposal, but it remains concerned about NCUA's initial estimates on how much the agency will spend to implement the rule. NAFCU also continues to push for broader MBL changes that would allow more credit unions to be exempt from the MBL cap.

During the webcast, Fazio also answered questions from moderator Alicia Nealon, NAFCU's director of regulatory affairs, and attendees about topics such as the credit risk rating system, the difference between the definition of MBLs and commercial loans and the definition of associated borrowers.

The webcast will be available on-demand for a year through NAFCU's Online Training Center.