MBL Bill Moves Closer To Vote

The reintroduced member business lending bill has been a hot topic of discussion.


A repackaged but still-controversial member business lending bill may be up for a vote as early as this week.

The bill, which has been introduced to Congress more than five times without being voted on, is identical to the bill that was debated in 2011.

Credit unions contend that the Small Business Lending Enhancement Act of 2012, which amends the Federal Credit Union Act, would boost credit unions’ ability to foster small business growth and add jobs. Critics, including the American Bankers Association, say credit unions can get themselves into financial trouble with business lending and, with their tax breaks in place, should abide by the current cap.

The current cap on member business lending is 12.25%. The bill, S. 2231, would allow well capitalized credit unions — those with assets at 7% or greater — to raise the cap to 27.5%. The limits on S. 2231 state an insured credit union may not make any member business loan that would result in the total amount of such loans outstanding at any one time to be equal to more than the lesser of 1.75 times the actual net worth or 12.25% of the total assets of the credit union.

Credit unions have been steadily increasing member business lending for several years. If the bill passes, well capitalized credit unions that can show five years of sound experience with member business lending would be able to increase the number of member business loans they could service.

Here is a look at the numbers that construct the bill:

  • 65.3% —The percentage of credit unions with more than $50 million in assets that offer member business loans.
  • 7.1% — The increase of outstanding business loans from 2010 to 2011 levels.
  • $12.2 billion — The amount of business loans credit unions granted in 2011.
  • 5.8% — The percentage of member business loans in the total credit union portfolio.
  • $33.8 billion — The amount of outstanding credit union member business loans
  • 170,000 — The number of business members these loans serve.
  • $200,814 — The average member business loan balance.
  • 83% — The number of business loans secured by real estate.
  • 30% — The rate of increase per year of member business lending may not exceed this percent.
  • 155 — The number of credit unions currently exceeding the 12.25% MBL cap.
  • 100 — The number of those 155 credit unions that were grandfathered in because they exceeded the 12.25% before the Federal Credit Union Act was supplemented.
  • 57 — The number of credit unions that would still exceed the 27.5% cap with S 2231 passed.
  • 118 — The number of credit unions with member business loans between 10% and 12.25%. These credit unions are most likely managing their ratio to remain below the current cap, but if the cap were raised would increase their lending.
  • $13 billion — The approximate amount of money in loans that would be pumped into the economy if S 2231 passed.
  • 140,000 — The expected number of jobs created if S. 2231 passed.
  • 9% — The percent of chance govtrack.us thinks the bill has to pass Congress.

If the Small Business Lending Enhancement Act of 2012 passes, the NCUA board will have to create a list of proposed rules and a tiered approval process within six months. The board will also submit a report to Congress within three years that includes the types and asset size of insured credit unions making member business loans, the ratio of member business loans to total net worth and asset size, the performance of the member business loans, and the effect of any increases in member business loans on the risk of the NCUSIF.