12 U.S.C. § 1757a (BANKS AND BANKING)
§ 1757a. Limitation on member business loans
(a) In general
On and after August 7, 1998, no insured credit union may make any member business loan that would result in a total amount of such loans outstanding at that credit union at any one time equal to more than the lesser of—
(1) 1.75 times the actual net worth of the credit union; or
(2) 1.75 times the minimum net worth required under section 1790d(c)(1)(A) of this title for a credit union to be well capitalized.
(b) Exceptions
Subsection (a) does not apply in the case of—
(1) an insured credit union chartered for the purpose of making, or that has a history of primarily making, member business loans to its members, as determined by the Board; or
(2) an insured credit union that—
(A) serves predominantly low-income members, as defined by the Board; or
(B) is a community development financial institution, as defined in section 4702 of this title.
(c) Definitions
As used in this section—
(1) the term “member business loan”—
(A) means any loan, line of credit, or letter of credit, the proceeds of which will be used for a commercial, corporate or other business investment property or venture, or agricultural purpose; and
(B) does not include an extension of credit—
(i) that is fully secured by a lien on a 1- to 4-family dwelling;
(ii) that is fully secured by shares in the credit union making the extension of credit or deposits in other financial institutions;
(iii) that is described in subparagraph (A), if it was made to a borrower or an associated member that has a total of all such extensions of credit in an amount equal to less than $50,000;
(iv) the repayment of which is fully insured or fully guaranteed by, or where there is an advance commitment to purchase in full by, any agency of the Federal Government or of a State, or any political subdivision thereof; or
(v) that is granted by a corporate credit union (as that term is defined by the Board) to another credit union.
(2) the term “net worth”—
(A) with respect to any insured credit union, means the credit union’s retained earnings balance, as determined under generally accepted accounting principles; and
(B) with respect to a credit union that serves predominantly low-income members, as defined by the Board, includes secondary capital accounts that are—
(i) uninsured; and
(ii) subordinate to all other claims against the credit union, including the claims of creditors, shareholders, and the Fund; and
(3) the term “associated member” means any member having a shared ownership, investment, or other pecuniary interest in a business or commercial endeavor with the borrower.
(d) Effect on existing loans
An insured credit union that has, on August 7, 1998, a total amount of outstanding member business loans that exceeds the amount permitted under subsection (a) shall, not later than 3 years after August 7, 1998, reduce the total amount of outstanding member business loans to an amount that is not greater than the amount permitted under subsection (a).
(e) Consultation and cooperation with State credit union supervisors
In implementing this section, the Board shall consult and seek to work cooperatively with State officials having jurisdiction over State-chartered insured credit unions.
(June 26, 1934, ch. 750, title I, § 107A, as added Pub. L. 105–219, title II, § 203(a), Aug. 7, 1998, 112 Stat. 920; amended Pub. L. 115–174, title I, § 105(a), May 24, 2018, 132 Stat. 1301.)
heading: Amendments
text: 2018—Subsec. (c)(1)(B)(i). Pub. L. 115–174 struck out “that is the primary residence of a member” after “dwelling”.
heading: Rule of Construction
text: Pub. L. 115–174, title I, § 105(b), May 24, 2018, 132 Stat. 1301, provided that: “Nothing in this section [amending this section] or the amendment made by this section shall preclude the National Credit Union Administration from treating an extension of credit that is fully secured by a lien on a 1- to 4-family dwelling that is not the primary residence of a member as a member business loan for purposes other than the member business loan limitation requirements under section 107A of the Federal Credit Union Act (12 U.S.C. 1757a).”
heading: Study and Report
text: Pub. L. 105–219, title II, § 203(b), Aug. 7, 1998, 112 Stat. 922, provided that:
“(1) Study.—
The Secretary [of the Treasury] shall conduct a study of member business lending by insured credit unions, including—
“(A) an examination of member business lending over $500,000 and under $50,000, and a breakdown of the types and sizes of businesses that receive member business loans;
“(B) a review of the effectiveness and enforcement of regulations applicable to insured credit union member business lending;
“(C) whether member business lending by insured credit unions could affect the safety and soundness of insured credit unions or the National Credit Union Share Insurance Fund;
“(D) the extent to which member business lending by insured credit unions helps to meet financial services needs of low- and moderate-income individuals within the field of membership of insured credit unions;
“(E) whether insured credit unions that engage in member business lending have a competitive advantage over other insured depository institutions, and if any such advantage could affect the viability and profitability of such other insured depository institutions; and
“(F) the effect of enactment of this Act [see Short Title of 1998 Amendment note set out under section 1751 of this title] on the number of insured credit unions involved in member business lending and the overall amount of commercial lending.
“(2) NCUA cooperation.—
The National Credit Union Administration shall, upon request, provide such information as the Secretary may require to conduct the study required under paragraph (1).
“(3) Report.—
Not later than 12 months after the date of enactment of this Act [Aug. 7, 1998], the Secretary shall submit a report to the Congress on the results of the study conducted under paragraph (1).”