CUNA Regulatory Comment Call
July 2, 2003
Proposed Revision of NCUA’s Loan Participation Rule
EXECUTIVE SUMMARY
- NCUA has determined that the agency’s loan participation rule needs to be updated and clarified. In that connection, NCUA has issued a proposal amending the agency’s loan participation rule. This proposed loan participation rule revision is unrelated to the proposed changes in the member business loan (MBL) rule that would allow credit unions to exclude loan participations from the 12.25% asset limit on MBLs.
- NCUA's loan participation rule provides that an FCU may engage in loan participations with "eligible organizations," which are defined as a credit union, credit union organization or financial organization. Currently, it is unclear whether all credit union service organizations (CUSOs), including those that principally provide services to credit union members as opposed to providing business that relates to the daily operation of credit union, are included. To address this, the definition of "credit union organization" would be modified in the loan participation rule to include CUSOs that "provide products and services related to the routine daily operations of credit unions and credit union members." With this revision, the definition of “credit union organization” in the loan participation rule would conform to NCUA’s interpretation of that term in the CUSO rule.
- Also, NCUA proposes to broaden the definition of financial organization to include state and federal government agencies. This expansion would provide federal credit unions (FCUs) greater flexibility in choosing appropriate loan participation partners. NCUA notes that there are various state and federal government supported loan programs that are geared to underserved borrowers. These types of programs, which include agricultural and small business lending, are ideally suited to the mission of FCUs.
- Comments are due to NCUA by September 2, 2003. Comments should be sent to: Becky Baker, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428. Comments may be faxed to NCUA at (703) 518-6319 or e-mailed to regcomments@ncua.gov . (Please submit your comments by one method only.) Please submit your comments to CUNA by August 25, 2003. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Senior Regulatory Counsel Catherine Orr at corr@cuna.com; or mail them to Mary and Catherine in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, D.C. 20004-2601. To obtain a copy of the proposal, please contact us or click here.
QUESTIONS REGARDING THE PROPOSAL
- Do you agree that the definition of "credit union organization" should be modified
in the loan participation rule to include CUSOs that "provide products and services related
to the routine daily operations of credit unions and credit union members?"
Yes ______ No ______
Please explain why or why not.
- Do you agree that the definition of financial organization in the loan participation
rule should be broadened to include state and federal government agencies?
Yes ______ No ______
Please explain why or why not.
- Are there other ways in which the rule should be modified to provide additional
flexibility for credit unions seeking to engage in loan participations?
Yes ______ No ______
If yes, what modification(s) do you suggest?
- Other comments?
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Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com |
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