Credit Union Small Business Jobs Creation Act

Summary:  Credit Union Small Business Jobs Creation Act   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 consistent with safe and sound operations. Directs the Comptroller General to study the status of member business lending by insured credit unions.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit Union Small Business Jobs 
Creation Act''.

SEC. 2. LIMITS ON MEMBER BUSINESS LOANS.

    (a) 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)).