CUNA Regulatory Comment Call

April 2, 2003

Amendment of NCUA's Member Business Loan Rule


The Board has issued a proposal amending the agency's Member Business Loan (MBL) rule. Based on the review conducted by Vice Chair JoAnn Johnson's internal working group on member business lending, the Board believes it should amend the MBL rule in certain areas it liberalized in approving state rules. Further, the Board decided to revise and clarify certain provisions that have caused confusion or created unnecessary regulatory burden. The NCUA Board will continue to be responsive to changes in the MBL marketplace, either by approving state-specific rules or considering future revisions to this rule. Comments on this proposal will be due June 3, 2003.

The following are the significant proposed revisions to the MBL rule:

Comments are due to NCUA by June 3, 2003. Please send your comments to CUNA by May 20, 2003. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at or to Senior Regulatory Counsel Catherine Orr at; or mail them to Mary or Catherine in c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, 6th Floor - South Building, Washington, DC 20004.

You may obtain a copy of the MBL proposal by contacting us or by clicking here.


  1. Do you agree with the proposed definition for "outstanding member business loan balance?"

    Yes ______ No ______

    If not, why not and what definition would you suggest instead?

  2. For construction and development lending, do you believe an equity interest of 25% as proposed would provide sufficient collateral for a credit union and adequate incentive for a borrower to complete a project?

    Yes ______ No ______

    If not, what should the appropriate equity interest percentage be?

  3. Are there any other provisions which you would like to see added with respect to residential real estate MBLs?

    Yes ______ No ______

    If yes, what are those provisions?

  4. Do you agree with the list of 4 criteria that must be met in order to make an unsecured MBL loan?

    Yes ______ No ______

    In not, please explain why not.

  5. Do you agree with the expansion of the standard risk-based net worth component for MBLs?

    If not, what do you think the component should be?

  6. The proposal states, "By authorizing CUSOs to originate business loans, credit unions can benefit from economies of scale by pooling their investments into a business lending CUSO, thus affording their small business members access to MBLs that may otherwise be unavailable through the credit union or other lenders." Do you foresee that many credit unions will look to CUSOs to serve their members by offering loans that the credit unions may be unable to grant?

    Yes ______ No ______

    Please explain.

  7. Are there any other provisions which you would like to see added to further facilitate member business lending?

    Yes ______ No ______

    If so, what are those additional provisions?

  8. Other Comments.

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •