NCUA Offers Additional Insights Into New Member Biz Loan Rule

ARLINTON, Va.—NCUA Office of Examination and Insurance Director Larry Fazio said last week that the agency’s final member business lending rule will help credit unions by offering more flexibility.
“We want to make it as flexible as possible while preserving the safety and soundness – and that’s really the whole impetus behind this final rule,” Fazio said during a free NAFCU webcast on the final MBL rule. 
 
Fazio said the final rule should be published in the Federal Register this week. Sixty days after the rule’s publication, the personal guarantee requirement will no longer be mandatory. The rest of the rule will go into effect on Jan. 1, 2017.
During the webinar Fazio noted that MBL has grown significantly at credit unions over the past 10 years. Now, he said, MBLs make up 7% of total loans in the credit union system.
At the beginning of the webcast, NAFCU Director of Regulatory Affairs Alicia Nealon surveyed attendees and found that 67% felt constrained by current MBL rules, highlighting the importance of regulatory relief in the area.
NCUA’s final MBL rule, approved last month, will allow credit unions to independently develop commercial underwriting standards commensurate with their own risk appetites.