September 18, 2012
After a letter from the National Credit Union Administration (NCUA) last month notified more than 1,000 federally chartered credit unions—including 18 in Oregon and Washington—of their eligibility to become low-income credit union (LICU) designation, the agency has announced plans to extend a similar offer to state-chartered credit unions.
The NCUA’s letter invited the credit unions to opt into the LICU designation simply by responding to the letter, whereas the process previously involved extensive papework. According to NCUA Chairman Debbie Matz’s keynote speech at last week’s 2012 NASCUS Summit, 553 have taken advantage of the offer so far.
One of the important benefits of the designation is the ability of LICUs to make unlimited member business loans (MBLs). The NCUA projected that this initiative could unlock between $250 million and half a billion dollars in new, near-term business lending if all qualified federal credit unions participate. The initiative had the potential to double the number of LICUs and increase their member business lending by nearly 75 percent.
Matz said the NCUA will meet with NASCUS President and CEO Mary Martha Fortney as it looks to create an opt-in process for state-chartered credit unions before the end of September.
Fortney told the Credit Union Times that the LICU program will have to comply with each individual state’s low-income program rules, adding that some states don’t even offer a low-income designation. The Times reported that the NCUA would verify eligible state-chartered credit unions on a quarterly basis and would provide state regulators with a list of eligible credit unions. The state regulators would then complete the process.
Questions or Concerns? Contact Matt Halvorson, Anthem Editor: email@example.com.