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News Now

Washington
SBA to seek larger disaster role for financials
WASHINGTON (1/9/08)—If the Small Business Administration (SBA) proceeds with reported plans to give financial institutions a larger role when disaster strikes a community, the Credit Union National Association (CUNA) will press to ensure credit unions are included. The SBA will ask Congress for authority to give financial institutions a more prominent lending role in disaster situations, according to American Banker (Dec. 28). Under one plan, financial institutions would be able to act as agents of the SBA and process disaster loans for a fee. A second initiative would provide an SBA government guarantee to some credit card purchases made by disaster victims. According to the report, both proposals are in early stages of development but at this point the plan to allow financial institutions to act as agents is expected to track a plan passed by the House in April. The House bill did not give direct lending authority, but instead would let banks process, approve, close, and service disaster loans for a fee of 2% of the loan amount. The Senate passed quite a different SBA proposal, one which would give banks the power to make emergency loans with an 85% guarantee, similar to that of an SBA 7(a) loan. Mary Dunn, CUNA SVP and deputy general counsel, said that as the SBA’s plan becomes public, CUNA will be working to ensure that credit unions are included in any new authorities.


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