II 

114TH CONGRESS 

1ST SESSION S. 2028 

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 

SEPTEMBER 10, 2015 

Mr. PAUL (for himself, Mr. WHITEHOUSE, and Mr. REED) 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. 

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

3 SECTION 1. SHORT TITLE; DEFINITIONS. 

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

5 ‘‘Small Business Lending Enhancement Act of 2015’’. 

6 (b) DEFINITIONS.—In this Act— 

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

8 Credit Union Administration Board; 


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

2 same meaning as in section 101 of the Federal 

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

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

5 same meaning as in section 107A(c)(1) of the Fed6 eral Credit Union Act (12 U.S.C. 1757a(c)(1)); 

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

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

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

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

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

12 Credit Union Act (12 U.S.C. 1790d(c)(1)(A)). 

13 SEC. 2. LIMITS ON MEMBER BUSINESS LOANS. 

14 Effective 6 months after the date of enactment of this 

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

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

17 ‘‘(a) LIMITATION.— 

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), an insured credit union may not make 

20 any member business loan that would result in the 

21 total amount of such loans outstanding at that cred22 it union at any one time to be equal to more than 

23 the lesser of— 

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

25 the credit union; or 


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

2 the credit union. 

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

4 may approve an application by an insured credit 

5 union upon a finding that the credit union meets the 

6 criteria under this paragraph to make 1 or more 

7 member business loans that would result in a total 

8 amount of such loans outstanding at any one time 

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

10 the credit union, if the credit union— 

11 ‘‘(A) had member business loans out12 standing at the end of each of the 4 consecutive 

13 quarters immediately preceding the date of the 

14 application, in a total amount of not less than 

15 80 percent of the applicable limitation under 

16 paragraph (1); 

17 ‘‘(B) is well capitalized, as defined in sec18 tion 216(c)(1)(A); 

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

20 experience of sound underwriting and servicing 

21 of member business loans; 

22 ‘‘(D) has the requisite policies and experi23 ence in managing member business loans; and 

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

25 Board determines are necessary to maintain the 


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1 safety and soundness of the insured credit 

2 union. 

3 ‘‘(3) EFFECT OF NOT BEING WELL CAPITAL4 IZED.—An insured credit union that has made mem5 ber business loans under an authorization under 

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

7 quarterly call report, well capitalized, may not make 

8 any member business loans, until such time as the 

9 credit union becomes well capitalized (as defined in 

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

11 quarterly call report, and obtains the approval of the 

12 Board.’’. 

13 SEC. 3. IMPLEMENTATION. 

14 (a) TIERED APPROVAL PROCESS.—The Board shall 

15 develop a tiered approval process, under which an insured 

16 credit union gradually increases the amount of member 

17 business lending in a manner that is consistent with safe 

18 and sound operations, subject to the limits established 

19 under section 107A(a)(2) of the Federal Credit Union Act 

20 (12 U.S.C. 1757a(a)(2)), as amended by this Act. The 

21 rate of increase under the process established under this 

22 paragraph may not exceed 30 percent per year. 

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

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

25 enactment of this Act, to establish the tiered approval 


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

2 process shall establish standards designed to ensure that 

3 the new business lending capacity authorized under sec4 tion 107A(a) of the Federal Credit Union Act (12 U.S.C. 

5 1757a(a)), as amended by this Act, is being used only by 

6 insured credit unions that are well-managed and well cap7 italized, as required under section 107A(a) of the Federal 

8 Credit Union Act (12 U.S.C. 1757a(a)), as amended by 

9 this Act, and as defined by the rules issued by the Board 

10 under this subsection. 

11 (c) CONSIDERATIONS.—In issuing rules required 

12 under this section, the Board shall consider— 

13 (1) the experience level of the institutions, in14 cluding a demonstrated history of sound member 

15 business lending; 

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

17 Federal Credit Union Act (12 U.S.C. 1757a(a)(2)), 

18 as amended by this Act; and 

19 (3) such other factors as the Board determines 

20 necessary or appropriate. 

21 SEC. 4. REPORTS TO CONGRESS ON MEMBER BUSINESS 

22 LENDING. 

23 (a) REPORT OF THE BOARD.— 

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

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


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1 submit a report to Congress on member business 

2 lending by insured credit unions. 

3 (2) REPORT.—The report required under para4 graph (1) shall include— 

5 (A) the types and asset size of insured 

6 credit unions making member business loans 

7 and the member business loan limitations appli8 cable to the insured credit unions; 

9 (B) the overall amount and average size of 

10 member business loans by each insured credit 

11 union; 

12 (C) the ratio of member business loans by 

13 insured credit unions to total assets and net 

14 worth; 

15 (D) the performance of the member busi16 ness loans, including delinquencies and net 

17 charge offs; 

18 (E) the effect of this Act and the amend19 ments made by this Act on the number of in20 sured credit unions engaged in member busi21 ness lending, any change in the amount of 

22 member business lending, and the extent to 

23 which any increase is attributed to the change 

24 in the limitation in section 107A(a) of the FedVerDate Sep 11 2014 04:29 Sep 11, 2015 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2028.IS S2028

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1 eral Credit Union Act (12 U.S.C. 1757a(a)), as 

2 amended by this Act; 

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

4 insured credit unions that were denied or ap5 proved by the Board for increased member 

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

7 Federal Credit Union Act (12 U.S.C. 

8 1757a(a)(2)), as amended by this Act, including 

9 denials and approvals under the tiered approval 

10 process; 

11 (G) the types and sizes of businesses that 

12 receive member business loans, the duration of 

13 the credit union membership of the businesses 

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

15 used to secure member business loans, and the 

16 income level of members receiving member busi17 ness loans; and 

18 (H) the effect of any increases in member 

19 business loans on the risk to the National Cred20 it Union Share Insurance Fund and the assess21 ments on insured credit unions. 

22 (b) GAO STUDY AND REPORT.— 

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

24 United States shall conduct a study on the status of 


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1 member business lending by insured credit unions, 

2 including— 

3 (A) trends in such lending; 

4 (B) types and amounts of member business 

5 loans; 

6 (C) the effectiveness of this section in en7 hancing small business lending; 

8 (D) recommendations for legislative action, 

9 if any, with respect to such lending; and 

10 (E) any other information that the Comp11 troller General considers relevant with respect 

12 to such lending. 

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

14 date of enactment of this Act, the Comptroller Gen15 eral shall submit a report to Congress on the study 

16 required under paragraph (1). 

Æ 


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