II 

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. 

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 2011’’. 

6 (b) DEFINITIONS.—In this Act— 


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

2 Credit Union Administration Board; 

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

4 same meaning as in section 101 of the Federal 

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

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

7 same meaning as in section 107A(c)(1) of the Fed8 eral Credit Union Act (12 U.S.C. 1757a(c)(1)); 

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

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

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

12 (5) the term ‘‘well capitalized’’ has the meaning 

13 given that term in section 216(c)(1)(A) of the Fed14 eral Credit Union Act (12 U.S.C. 1709d(c)(1)(A)). 

15 SEC. 2. LIMITS ON MEMBER BUSINESS LOANS. 

16 Effective 6 months after the date of enactment of this 

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

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

19 ‘‘(a) LIMITATION.— 

20 ‘‘(1) IN GENERAL.—Except as provided in para21 graph (2), an insured credit union may not make 

22 any member business loan that would result in the 

23 total amount of such loans outstanding at that cred24 it union at any one time to be equal to more than 

25 the lesser of— 


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

2 the credit union; or 

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

4 the credit union. 

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

6 may approve an application by an insured credit 

7 union upon a finding that the credit union meets the 

8 criteria under this paragraph to make 1 or more 

9 member business loans that would result in a total 

10 amount of such loans outstanding at any one time 

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

12 the credit union, if the credit union— 

13 ‘‘(A) had member business loans out14 standing at the end of each of the 4 consecutive 

15 quarters immediately preceding the date of the 

16 application, in a total amount of not less than 

17 80 percent of the applicable limitation under 

18 paragraph (1); 

19 ‘‘(B) is well capitalized, as defined in sec20 tion 216(c)(1)(A); 

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

22 experience of sound underwriting and servicing 

23 of member business loans; 

24 ‘‘(D) has the requisite policies and experi25 ence in managing member business loans; and 


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

2 Board determines are necessary to maintain the 

3 safety and soundness of the insured credit 

4 union. 

5 ‘‘(3) EFFECT OF NOT BEING WELL CAPITAL6 IZED.—An insured credit union that has made mem7 ber business loans under an authorization under 

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

9 quarterly call report, well capitalized, may not make 

10 any member business loans, until such time as the 

11 credit union becomes well capitalized (as defined in 

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

13 quarterly call report, and obtains the approval of the 

14 Board.’’. 

15 SEC. 3. IMPLEMENTATION. 

16 (a) TIERED APPROVAL PROCESS.—The National 

17 Credit Union Administration Board shall develop a tiered 

18 approval process, under which an insured credit union 

19 gradually increases the amount of member business lend20 ing in a manner that is consistent with safe and sound 

21 operations, subject to the limits established under section 

22 107A(a)(2) of the Federal Credit Union Act (as amended 

23 by this Act). The rate of increase under the process estab24 lished under this paragraph may not exceed 30 percent 

25 per year. 


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

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

3 enactment of this Act, to establish the tiered approval 

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

5 process shall establish standards designed to ensure that 

6 the new business lending capacity authorized under the 

7 amendment made by section 2 is being used only by in8 sured credit unions that are well-managed and well cap9 italized, as required by the amendments made under sec10 tion 2, and as defined by the rules issued by the Board 

11 under this subsection. 

12 (c) CONSIDERATIONS.—In issuing rules required 

13 under this section, the Board shall consider— 

14 (1) the experience level of the institutions, in15 cluding a demonstrated history of sound member 

16 business lending; 

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

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

19 and 

20 (3) such other factors as the Board determines 

21 necessary or appropriate. 

22 SEC. 4. REPORTS TO CONGRESS ON MEMBER BUSINESS 

23 LENDING. 

24 (a) REPORT OF THE BOARD.— 


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

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

3 submit a report to Congress on member business 

4 lending by insured credit unions. 

5 (2) REPORT.—The report required under para6 graph (1) shall include— 

7 (A) the types and asset size of insured 

8 credit unions making member business loans 

9 and the member business loan limitations appli10 cable to the insured credit unions; 

11 (B) the overall amount and average size of 

12 member business loans by each insured credit 

13 union; 

14 (C) the ratio of member business loans by 

15 insured credit unions to total assets and net 

16 worth; 

17 (D) the performance of the member busi18 ness loans, including delinquencies and net 

19 charge offs; 

20 (E) the effect of this Act and the amend21 ments made by this Act on the number of in22 sured credit unions engaged in member busi23 ness lending, any change in the amount of 

24 member business lending, and the extent to 

25 which any increase is attributed to the change 


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1 in the limitation in section 107A(a) of the Fed2 eral Credit Union Act, as 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, as amended by this 

8 Act, including denials and approvals under the 

9 tiered approval process; 

10 (G) the types and sizes of businesses that 

11 receive member business loans, the duration of 

12 the credit union membership of the businesses 

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

14 used to secure member business loans, and the 

15 income level of members receiving member busi16 ness loans; and 

17 (H) the effect of any increases in member 

18 business loans on the risk to the National Cred19 it Union Share Insurance Fund and the assess20 ments on insured credit unions. 

21 (b) GAO STUDY AND REPORT.— 

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

23 United States shall conduct a study on the status of 

24 member business lending by insured credit unions, 

25 including— 


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1 (A) trends in such lending; 

2 (B) types and amounts of member business 

3 loans; 

4 (C) the effectiveness of this section in en5 hancing small business lending; 

6 (D) recommendations for legislative action, 

7 if any, with respect to such lending; and 

8 (E) any other information that the Comp9 troller General considers relevant with respect 

10 to such lending. 

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

12 date of enactment of this Act, the Comptroller Gen13 eral shall submit a report to Congress on the study 

14 required by paragraph (1). 

Æ 


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