HR 1418 IHCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

H. R. 1418CommentsClose CommentsPermalink

To amend the Federal Credit Union Act to provide certain credit unions with the authority to make additional member business loans, and for other purposes.CommentsClose CommentsPermalink

IN THE HOUSE OF REPRESENTATIVESCommentsClose CommentsPermalink

April 7, 2011CommentsClose CommentsPermalink

Mr. ROYCE (for himself, Mrs. MCCARTHY of New York, Mr. JOHNSON of Georgia, Mr. PETERS, and Mr. CARNAHAN) introduced the following bill; which was referred to the Committee on Financial ServicesCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Federal Credit Union Act to provide certain credit unions with the authority to make additional member business loans, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Small Business Lending Enhancement Act of 2011’.CommentsClose CommentsPermalink

SEC. 2. LIMITS ON MEMBER BUSINESS LOANS.

(a) In General-CommentsClose CommentsPermalink





(1) REVISED LIMITATION AND CRITERIA- Effective 6 months after the date of enactment of this Act, section 107A(a) of the Federal Credit Union Act (12 U.S.C. 1757a(a)) is amended to read as follows:CommentsClose CommentsPermalink





‘(a) Limitation-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Except as provided in paragraph (2), an insured credit union may not make any member business loan that would result in the total amount of such loans outstanding at that credit union at any one time to be equal to more than the lesser of--CommentsClose CommentsPermalink





‘(A) 1.75 times the actual net worth of the credit union; orCommentsClose CommentsPermalink





‘(B) 12.25 percent of the total assets of the credit union.CommentsClose CommentsPermalink





‘(2) ADDITIONAL AUTHORITY- The Board may approve an application by an insured credit union upon a finding that the credit union meets the criteria under this paragraph to make 1 or more member business loans that would result in a total amount of such loans outstanding at any one time of not more than 27.5 percent of the total assets of the credit union, if the credit union--CommentsClose CommentsPermalink





‘(A) had member business loans outstanding at the end of each of the 4 consecutive quarters immediately preceding the date of the application, in a total amount of not less than 80 percent of the applicable limitation under paragraph (1);CommentsClose CommentsPermalink





‘(B) is well capitalized, as defined in section 216(c)(1)(A);CommentsClose CommentsPermalink





‘(C) can demonstrate at least 5 years of experience of sound underwriting and servicing of member business loans;CommentsClose CommentsPermalink





‘(D) has the requisite policies and experience in managing member business loans; andCommentsClose CommentsPermalink





‘(E) has satisfied other standards that the Board determines are necessary to maintain the safety and soundness of the insured credit union.CommentsClose CommentsPermalink





‘(3) EFFECT OF NOT BEING WELL CAPITALIZED- An insured credit union that has made member business loans under an authorization under paragraph (2) and that is not, as of its most recent quarterly call report, well capitalized, may not make any member business loans, until such time as the credit union becomes well capitalized, as reflected in a subsequent quarterly call report, and obtains the approval of the Board.’.CommentsClose CommentsPermalink





(b) Implementation-CommentsClose CommentsPermalink





(1) TIERED APPROVAL PROCESS- The Board shall develop a tiered approval process, under which an insured credit union gradually increases the amount of member business lending in a manner that is consistent with safe and sound operations, subject to the limits established under section 107A(a)(2) of the Federal Credit Union Act (as amended by this Act). The rate of increase under the process established under this paragraph may not exceed 30 percent per year.CommentsClose CommentsPermalink





(2) RULEMAKING REQUIRED- The Board shall issue proposed rules, not later than 6 months after the date of enactment of this Act, to establish the tiered approval process required under paragraph (1). The tiered approval process shall establish standards designed to ensure that the new business lending capacity authorized under the amendment made by subsection (a) is being used only by insured credit unions that are well-managed and well capitalized, as required by the amendments made under subsection (a) and as defined by the rules issued by the Board under this paragraph.CommentsClose CommentsPermalink





(3) CONSIDERATIONS- In issuing rules required under this subsection, the Board shall consider--CommentsClose CommentsPermalink





(A) the experience level of the institutions, including a demonstrated history of sound member business lending;CommentsClose CommentsPermalink





(B) the criteria under section 107A(a)(2) of the Federal Credit Union Act, as amended by this Act; andCommentsClose CommentsPermalink





(C) such other factors as the Board determines necessary or appropriate.CommentsClose CommentsPermalink





(c) Reports to Congress on Member Business Lending-CommentsClose CommentsPermalink





(1) REPORT OF THE BOARD-CommentsClose CommentsPermalink





(A) IN GENERAL- Not later than 3 years after the date of enactment of this Act, the Board shall submit a report to Congress on member business lending by insured credit unions.CommentsClose CommentsPermalink





(B) REPORT- The report required under subparagraph (A) shall include--CommentsClose CommentsPermalink





(i) the types and asset size of insured credit unions making member business loans and the member business loan limitations applicable to the insured credit unions;CommentsClose CommentsPermalink





(ii) the overall amount and average size of member business loans by each insured credit union;CommentsClose CommentsPermalink





(iii) the ratio of member business loans by insured credit unions to total assets and net worth;CommentsClose CommentsPermalink





(iv) the performance of the member business loans, including delinquencies and net charge-offs;CommentsClose CommentsPermalink





(v) the effect of this section on the number of insured credit unions engaged in member business lending, any change in the amount of member business lending, and the extent to which any increase is attributed to the change in the limitation in section 107A(a) of the Federal Credit Union Act, as amended by this Act;CommentsClose CommentsPermalink





(vi) the number, types, and asset size of insured credit unions that were denied or approved by the Board for increased member business loans under section 107A(a)(2), as amended by this Act, including denials and approvals under the tiered approval process;CommentsClose CommentsPermalink





(vii) the types and sizes of businesses that receive member business loans, the duration of the credit union membership of the businesses at the time of the loan, the types of collateral used to secure member business loans, and the income level of members receiving member business loans; andCommentsClose CommentsPermalink





(viii) the effect of any increases in member business loans on the risk to the National Credit Union Share Insurance Fund and the assessments on insured credit unions.CommentsClose CommentsPermalink





(2) GAO STUDY AND REPORT-CommentsClose CommentsPermalink





(A) STUDY- The Comptroller General of the United States shall conduct a study on the status of member business lending by insured credit unions, including--CommentsClose CommentsPermalink





(i) trends in such lending;CommentsClose CommentsPermalink





(ii) types and amounts of member business loans;CommentsClose CommentsPermalink





(iii) the effectiveness of this section in enhancing small business lending;CommentsClose CommentsPermalink





(iv) recommendations for legislative action, if any, with respect to such lending; andCommentsClose CommentsPermalink





(v) any other information that the Comptroller General considers relevant with respect to such lending.CommentsClose CommentsPermalink





(B) REPORT- Not later than 3 years after the date of enactment of this Act, the Comptroller General shall submit a report to Congress on the study required by subparagraph (A).CommentsClose CommentsPermalink





(d) Definitions- In this section--CommentsClose CommentsPermalink





(1) the term ‘Board’ means the National Credit Union Administration Board;CommentsClose CommentsPermalink





(2) the term ‘insured credit union’ has the meaning given that term in section 101 of the Federal Credit Union Act (12 U.S.C. 1752);CommentsClose CommentsPermalink





(3) the term ‘member business loan’ has the meaning given that term in section 107A(c)(1) of the Federal Credit Union Act (12 U.S.C. 1757a(c)(1));CommentsClose CommentsPermalink





(4) the term ‘net worth’ has the meaning given that term in section 107A(c)(2) of the Federal Credit Union Act (12 U.S.C. 1757a(c)(2)); andCommentsClose CommentsPermalink





(5) the term ‘well capitalized’ has the meaning given that term in section 216(c)(1)(A) of the Federal Credit Union Act (12 U.S.C. 1709d(c)(1)(A)).CommentsClose CommentsPermalink