II 

Calendar No. 340 

112TH CONGRESS 

2D SESSION S. 2231 

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 22, 2012 

Mr. UDALL of Colorado (for himself, Ms. SNOWE, Mr. SCHUMER, Mr. LIEBERMAN, Mr. BEGICH, Mrs. BOXER, Mr. BROWN of Ohio, Ms. COLLINS, 

Mrs. FEINSTEIN, Mr. FRANKEN, Mrs. GILLIBRAND, Mr. INOUYE, Mr. 

LEAHY, Mr. LEVIN, Mr. NELSON of Florida, Mr. PAUL, Mr. REED, Mr. 

REID, Mr. SANDERS, Ms. STABENOW, Mr. WHITEHOUSE, and Mr. 

WYDEN) introduced the following bill; which was read the first time 

MARCH 26, 2012 

Read the second time and placed on the calendar 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE; DEFINITIONS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Small Business Lending Enhancement Act of 2012’’. 

4 (b) DEFINITIONS.—In this Act— 

5 (1) the term ‘‘Board’’ means the National 

6 Credit Union Administration Board; 

7 (2) the term ‘‘insured credit union’’ has the 

8 same meaning as in section 101 of the Federal 

9 Credit Union Act (12 U.S.C. 1752); 

10 (3) the term ‘‘member business loan’’ has the 

11 same meaning as in section 107A(c)(1) of the Fed12 eral Credit Union Act (12 U.S.C. 1757a(c)(1)); 

13 (4) the term ‘‘net worth’’ has the same meaning 

14 as in section 107A(c)(2) of the Federal Credit Union 

15 Act (12 U.S.C. 1757a(c)(2)); and 

16 (5) the term ‘‘well capitalized’’ has the same 

17 meaning as in section 216(c)(1)(A) of the Federal 

18 Credit Union Act (12 U.S.C. 1709d(c)(1)(A)). 

19 SEC. 2. LIMITS ON MEMBER BUSINESS LOANS. 

20 Effective 6 months after the date of enactment of this 

21 Act, section 107A(a) of the Federal Credit Union Act (12 

22 U.S.C. 1757a(a)) is amended to read as follows: 

23 ‘‘(a) LIMITATION.— 

24 ‘‘(1) IN GENERAL.—Except as provided in para25 graph (2), an insured credit union may not make 

26 any member business loan that would result in the 


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1 total amount of such loans outstanding at that cred2 it union at any one time to be equal to more than 

3 the lesser of— 

4 ‘‘(A) 1.75 times the actual net worth of 

5 the credit union; or 

6 ‘‘(B) 12.25 percent of the total assets of 

7 the credit union. 

8 ‘‘(2) ADDITIONAL AUTHORITY.—The Board 

9 may approve an application by an insured credit 

10 union upon a finding that the credit union meets the 

11 criteria under this paragraph to make 1 or more 

12 member business loans that would result in a total 

13 amount of such loans outstanding at any one time 

14 of not more than 27.5 percent of the total assets of 

15 the credit union, if the credit union— 

16 ‘‘(A) had member business loans out17 standing at the end of each of the 4 consecutive 

18 quarters immediately preceding the date of the 

19 application, in a total amount of not less than 

20 80 percent of the applicable limitation under 

21 paragraph (1); 

22 ‘‘(B) is well capitalized, as defined in sec23 tion 216(c)(1)(A); 


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1 ‘‘(C) can demonstrate at least 5 years of 

2 experience of sound underwriting and servicing 

3 of member business loans; 

4 ‘‘(D) has the requisite policies and experi5 ence in managing member business loans; and 

6 ‘‘(E) has satisfied other standards that the 

7 Board determines are necessary to maintain the 

8 safety and soundness of the insured credit 

9 union. 

10 ‘‘(3) EFFECT OF NOT BEING WELL CAPITAL11 IZED.—An insured credit union that has made mem12 ber business loans under an authorization under 

13 paragraph (2) and that is not, as of its most recent 

14 quarterly call report, well capitalized, may not make 

15 any member business loans, until such time as the 

16 credit union becomes well capitalized (as defined in 

17 section 216(c)(1)(A)), as reflected in a subsequent 

18 quarterly call report, and obtains the approval of the 

19 Board.’’. 

20 SEC. 3. IMPLEMENTATION. 

21 (a) TIERED APPROVAL PROCESS.—The National 

22 Credit Union Administration Board shall develop a tiered 

23 approval process, under which an insured credit union 

24 gradually increases the amount of member business lend25 ing in a manner that is consistent with safe and sound 


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1 operations, subject to the limits established under section 

2 107A(a)(2) of the Federal Credit Union Act (as amended 

3 by this Act). The rate of increase under the process estab4 lished under this paragraph may not exceed 30 percent 

5 per year. 

6 (b) RULEMAKING REQUIRED.—The Board shall issue 

7 proposed rules, not later than 6 months after the date of 

8 enactment of this Act, to establish the tiered approval 

9 process required under subsection (a). The tiered approval 

10 process shall establish standards designed to ensure that 

11 the new business lending capacity authorized under the 

12 amendment made by section 2 is being used only by in13 sured credit unions that are well-managed and well cap14 italized, as required by the amendments made under sec15 tion 2, and as defined by the rules issued by the Board 

16 under this subsection. 

17 (c) CONSIDERATIONS.—In issuing rules required 

18 under this section, the Board shall consider— 

19 (1) the experience level of the institutions, in20 cluding a demonstrated history of sound member 

21 business lending; 

22 (2) the criteria under section 107A(a)(2) of the 

23 Federal Credit Union Act, as amended by this Act; 

24 and 


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1 (3) such other factors as the Board determines 

2 necessary or appropriate. 

3 SEC. 4. REPORTS TO CONGRESS ON MEMBER BUSINESS 

4 LENDING. 

5 (a) REPORT OF THE BOARD.— 

6 (1) IN GENERAL.—Not later than 3 years after 

7 the date of enactment of this Act, the Board shall 

8 submit a report to Congress on member business 

9 lending by insured credit unions. 

10 (2) REPORT.—The report required under para11 graph (1) shall include— 

12 (A) the types and asset size of insured 

13 credit unions making member business loans 

14 and the member business loan limitations appli15 cable to the insured credit unions; 

16 (B) the overall amount and average size of 

17 member business loans by each insured credit 

18 union; 

19 (C) the ratio of member business loans by 

20 insured credit unions to total assets and net 

21 worth; 

22 (D) the performance of the member busi23 ness loans, including delinquencies and net 

24 charge offs; 


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1 (E) the effect of this Act and the amend2 ments made by this Act on the number of in3 sured credit unions engaged in member busi4 ness lending, any change in the amount of 

5 member business lending, and the extent to 

6 which any increase is attributed to the change 

7 in the limitation in section 107A(a) of the Fed8 eral Credit Union Act, as amended by this Act; 

9 (F) the number, types, and asset size of 

10 insured credit unions that were denied or ap11 proved by the Board for increased member 

12 business loans under section 107A(a)(2) of the 

13 Federal Credit Union Act, as amended by this 

14 Act, including denials and approvals under the 

15 tiered approval process; 

16 (G) the types and sizes of businesses that 

17 receive member business loans, the duration of 

18 the credit union membership of the businesses 

19 at the time of the loan, the types of collateral 

20 used to secure member business loans, and the 

21 income level of members receiving member busi22 ness loans; and 

23 (H) the effect of any increases in member 

24 business loans on the risk to the National CredVerDate Mar 15 2010 00:26 Mar 27, 2012 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.PCS S2231

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1 it Union Share Insurance Fund and the assess2 ments on insured credit unions. 

3 (b) GAO STUDY AND REPORT.— 

4 (1) STUDY.—The Comptroller General of the 

5 United States shall conduct a study on the status of 

6 member business lending by insured credit unions, 

7 including— 

8 (A) trends in such lending; 

9 (B) types and amounts of member business 

10 loans; 

11 (C) the effectiveness of this section in en12 hancing small business lending; 

13 (D) recommendations for legislative action, 

14 if any, with respect to such lending; and 

15 (E) any other information that the Comp16 troller General considers relevant with respect 

17 to such lending. 

18 (2) REPORT.—Not later than 3 years after the 

19 date of enactment of this Act, the Comptroller Gen20 eral shall submit a report to Congress on the study 

21 required by paragraph (1). 


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Calendar No. 340 

112TH CONGRESS 

2D SESSION S. 2231 

A BILL 

To amend the Federal Credit Union Act, to adopportunities, and for other purposes. small business growth and economic development vance the ability of credit unions to promote 

MARCH 26, 2012 

Read the second time and placed on the calendar 


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