Newsroom

April 11, 2013

Hearing highlights MBL cap dilemma

April 11, 2013 – Wednesday's House subcommittee hearing on regulatory relief for credit unions drew discussion of one key issue raised in NAFCU's five-point regulatory relief plan: the need for more member business loan authority for credit unions.

Several committee members, including Rep. Ed Royce, R-Calif., pointed out the constraints that the current MBL cap is placing on small business's access to credit. Royce, chief sponsor of H.R. 688 to raise the MBL cap, pointed out many of the business loans being requested of credit unions aren't being granted by banks.

Often, he said, the MBL cap is forcing some small businesses to make a choice between downsizing or closing their doors.

NAFCU witness Bob Burrow, president and CEO of Bayer Heritage FCU, said it's a real problem for his credit union, particularly since current law uses a $50,000 threshold in defining which loans just be counted toward the statutory, 12.25 percent-of-assets cap on credit union MBLs.

Burrow noted, for example, that his credit union right couldn't even give a member small-business owner a $100,000 loan so he can purchase a backhoe. "Most banks aren't interested, so he may be going without," he said.