[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1418 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 1418
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 7, 2011
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 Services
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Lending Enhancement
Act of 2011''.
SEC. 2. LIMITS ON MEMBER BUSINESS LOANS.
(a) In General.--
(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:
``(a) Limitation.--
``(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--
``(A) 1.75 times the actual net worth of the credit
union; or
``(B) 12.25 percent of the total assets of the
credit union.
``(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--
``(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);
``(B) is well capitalized, as defined in section
216(c)(1)(A);
``(C) can demonstrate at least 5 years of
experience of sound underwriting and servicing of
member business loans;
``(D) has the requisite policies and experience in
managing member business loans; and
``(E) has satisfied other standards that the Board
determines are necessary to maintain the safety and
soundness of the insured credit union.
``(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.''.
(b) Implementation.--
(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.
(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.
(3) Considerations.--In issuing rules required under this
subsection, the Board shall consider--
(A) the experience level of the institutions,
including a demonstrated history of sound member
business lending;
(B) the criteria under section 107A(a)(2) of the
Federal Credit Union Act, as amended by this Act; and
(C) such other factors as the Board determines
necessary or appropriate.
(c) Reports to Congress on Member Business Lending.--
(1) Report of the board.--
(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.
(B) Report.--The report required under subparagraph
(A) shall include--
(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;
(ii) the overall amount and average size of
member business loans by each insured credit
union;
(iii) the ratio of member business loans by
insured credit unions to total assets and net
worth;
(iv) the performance of the member business
loans, including delinquencies and net charge-
offs;
(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;
(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;
(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; and
(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.
(2) GAO study and report.--
(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--
(i) trends in such lending;
(ii) types and amounts of member business
loans;
(iii) the effectiveness of this section in
enhancing small business lending;
(iv) recommendations for legislative
action, if any, with respect to such lending;
and
(v) any other information that the
Comptroller General considers relevant with
respect to such lending.
(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).
(d) Definitions.--In this section--
(1) the term ``Board'' means the National Credit Union
Administration Board;
(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);
(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));
(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)); and
(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)).
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