Small Business Lending Enhancement Act of 2011 - Amends the Federal Credit Union Act to prohibit an insured credit union from making any member business loan that would result in the total amount of such loans outstanding at that credit union at any one time exceeding either: (1) 1.75 times the actual net worth of the credit union, or (2) 12.25% of the total assets of the credit union.
Authorizes the National Credit Union Administration Board to approve an application by an insured credit union to make one or more member business loans that would result in a total amount of such loans outstanding at any one time of up to 27.5 % of the total assets of the credit union, if the credit union meets specified safety and soundness criteria. Prohibits an insured credit union that has made such a member business loan but that is not well capitalized from making any new member business loans until it becomes well capitalized and obtains Board approval.
Directs the Board to develop a tiered approval process, including lending standards, 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.
Directs the Comptroller General to study the status of member business lending by insured credit unions.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 509 Introduced in Senate (IS)]
112th CONGRESS
1st Session
S. 509
To amend the Federal Credit Union Act, to advance the ability of credit
unions to promote small business growth and economic development
opportunities, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 8, 2011
Mr. Udall of Colorado (for himself, Ms. Snowe, Mr. Schumer, Mrs. Boxer,
Mr. Brown of Ohio, Ms. Collins, Mr. Franken, Mrs. Gillibrand, Mr.
Leahy, Mr. Lieberman, Mr. Nelson of Florida, Mr. Reed, Mr. Whitehouse,
and Mr. Wyden) introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Federal Credit Union Act, to advance the ability of credit
unions to promote small business growth and economic development
opportunities, 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; DEFINITIONS.
(a) Short Title.--This Act may be cited as the ``Small Business
Lending Enhancement Act of 2011''.
(b) Definitions.--In this Act--
(1) the term ``Board'' means the National Credit Union
Administration Board;
(2) the term ``insured credit union'' has the same meaning
as in section 101 of the Federal Credit Union Act (12 U.S.C.
1752);
(3) the term ``member business loan'' has the same meaning
as 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 same meaning as 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)).
SEC. 2. LIMITS ON MEMBER BUSINESS LOANS.
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 defined in section
216(c)(1)(A)), as reflected in a subsequent quarterly call
report, and obtains the approval of the Board.''.
SEC. 3. IMPLEMENTATION.
(a) Tiered Approval Process.--The National Credit Union
Administration 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.
(b) 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 subsection (a).
The tiered approval process shall establish standards designed to
ensure that the new business lending capacity authorized under the
amendment made by section 2 is being used only by insured credit unions
that are well-managed and well capitalized, as required by the
amendments made under section 2, and as defined by the rules issued by
the Board under this subsection.
(c) Considerations.--In issuing rules required under this section,
the Board shall consider--
(1) the experience level of the institutions, including a
demonstrated history of sound member business lending;
(2) the criteria under section 107A(a)(2) of the Federal
Credit Union Act, as amended by this Act; and
(3) such other factors as the Board determines necessary or
appropriate.
SEC. 4. REPORTS TO CONGRESS ON MEMBER BUSINESS LENDING.
(a) Report of the Board.--
(1) 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.
(2) Report.--The report required under paragraph (1) shall
include--
(A) 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;
(B) the overall amount and average size of member
business loans by each insured credit union;
(C) the ratio of member business loans by insured
credit unions to total assets and net worth;
(D) the performance of the member business loans,
including delinquencies and net charge offs;
(E) the effect of this Act and the amendments made
by this Act 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;
(F) 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) of the Federal Credit Union Act, as amended
by this Act, including denials and approvals under the
tiered approval process;
(G) 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
(H) 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.
(b) GAO Study and Report.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on the status of member business lending
by insured credit unions, including--
(A) trends in such lending;
(B) types and amounts of member business loans;
(C) the effectiveness of this section in enhancing
small business lending;
(D) recommendations for legislative action, if any,
with respect to such lending; and
(E) any other information that the Comptroller
General considers relevant with respect to such
lending.
(2) 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 paragraph (1).
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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