Sec. 2. Limits on Member Business Loans
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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: 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— 1.75 times the actual net worth of the credit union; or 12.25 percent of the total assets of the credit union.
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— 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); is well capitalized, as defined in section 216(c)(1)(A); can demonstrate at least 5 years of experience of sound underwriting and servicing of member business loans; has the requisite policies and experience in managing member business loans; and has satisfied other standards that the Board determines are necessary to maintain the safety and soundness of the insured credit union.
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. .
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Sec. 2
Limits on Member Business Loans
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