II 114th CONGRESS 1st Session S. 2028 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. Short title; definitions (a) Short title This Act may be cited as the Small Business Lending Enhancement Act of 2015 . (b) Definitions In this Act— (1) the term Board means the National Credit Union Administration Board; (2) the term insured credit union has the same meaning as in section 101 of the Federal Credit Union Act ( 12 U.S.C. 1752 ); (3) the term member business loan has the same meaning as 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 same meaning as 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 same meaning as in section 216(c)(1)(A) of the Federal Credit Union Act ( 12 U.S.C. 1790d(c)(1)(A) ). 2. Limits on Member Business Loans 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 defined in section 216(c)(1)(A)), as reflected in a subsequent quarterly call report, and obtains the approval of the Board. . 3. Implementation (a) 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 ( 12 U.S.C. 1757a(a)(2) ), as amended by this Act. The rate of increase under the process established under this paragraph may not exceed 30 percent per year. (b) 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 subsection (a). The tiered approval process shall establish standards designed to ensure that the new business lending capacity authorized under section 107A(a) of the Federal Credit Union Act ( 12 U.S.C. 1757a(a) ), as amended by this Act, is being used only by insured credit unions that are well-managed and well capitalized, as required under section 107A(a) of the Federal Credit Union Act ( 12 U.S.C. 1757a(a) ), as amended by this Act, and as defined by the rules issued by the Board under this subsection. (c) Considerations In issuing rules required under this section, the Board shall consider— (1) the experience level of the institutions, including a demonstrated history of sound member business lending; (2) the criteria under section 107A(a)(2) of the Federal Credit Union Act ( 12 U.S.C. 1757a(a)(2) ), as amended by this Act; and (3) such other factors as the Board determines necessary or appropriate. 4. Reports to Congress on Member Business Lending (a) Report of the Board (1) 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. (2) Report The report required under paragraph (1) shall include— (A) 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; (B) the overall amount and average size of member business loans by each insured credit union; (C) the ratio of member business loans by insured credit unions to total assets and net worth; (D) the performance of the member business loans, including delinquencies and net charge offs; (E) the effect of this Act and the amendments made by this Act 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 ( 12 U.S.C. 1757a(a) ), as amended by this Act; (F) 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) of the Federal Credit Union Act ( 12 U.S.C. 1757a(a)(2) ), as amended by this Act, including denials and approvals under the tiered approval process; (G) 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 (H) 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. (b) GAO study and report (1) Study The Comptroller General of the United States shall conduct a study on the status of member business lending by insured credit unions, including— (A) trends in such lending; (B) types and amounts of member business loans; (C) the effectiveness of this section in enhancing small business lending; (D) recommendations for legislative action, if any, with respect to such lending; and (E) any other information that the Comptroller General considers relevant with respect to such lending. (2) 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 under paragraph (1).