NEWS: Wisconsin’s Office of Credit Union (OCU) has once again started the process of updating its definition of a “member business loan” (MBL) for state-chartered credit unions, and The League has voiced its support for the agency’s efforts.
This week, the Wisconsin Department of Financial Institutions (DFI) published a “Statement of Scope” and held a brief preliminary hearing to gather input from interested parties as the OCU works to revise its rules. League staff appeared at the hearing to register our support for the OCU’s plans, and we submitted a comment letter to the DFI, explaining why we favor an update to the MBL definition.
The OCU plans to make several technical updates to its regulations (e.g., repealing obsolete provisions and fixing outdated cross-references), as well as revising the definition of what an MBL is, so that our state rules match the NCUA’s definition under federal law.
The change is an important issue for Wisconsin credit unions. It would clarify that 1) non-member participation loans and 2) loans secured by a one- to four-family residential property (whether owner-occupied or not) are not MBLs under Wisconsin law, and therefore they would not count against the aggregate cap on a Wisconsin credit union’s business loan portfolio. This would enable our state’s credit unions to better serve the borrowing needs of businesses across Wisconsin.
“The new definition of a member business loan would simply mirror the NCUA’s current MBL regulations,” we wrote. “Approval of this long-overdue change would ensure that Wisconsin credit unions operate with the same definition of a business loan as federal credit unions and the state-chartered credit unions in most other states – helping to safeguard the continued viability of our state-chartered credit unions.”
This change was already approved once in Wisconsin (in 2020) but due to a three-year procedural delay in getting the NCUA to OK the change, the OCU has been required to promulgate the rule again at the state level, re-starting the rulemaking process in Madison.
The DFI will hold another hearing in the future as the OCU continues its work on the regulatory updates. The League will keep advocating for the MBL amendment, and we’ll notify credit unions of developments.
We want to thank Dave Englebert of Capital Credit Union, a League Government Affairs Committee member, for also commenting in support of a revised MBL definition.
As expected, the Wisconsin Bankers Association (WBA) appeared at this week’s hearing as well, to register its opposition to the change. The WBA accused the OCU of “cherry picking” from the NCUA’s rules for updates at the state level. “If OCU is so set on conforming DFI-CU to the federal law, it need adopt the federal law in its totality—including more robust board of director and management responsibilities, updated commercial lending policy provisions, and the federal law aggregate member business loan limit, exclusion, and exemptions terms,” the WBA wrote in a comment letter it submitted to the DFI.