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New legislation would exclude loans to veterans from MBL cap

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A bill introduced in the House this week could provide some relief to credit unions approaching the member business lending cap.

The Veterans Member Business Loan Act, introduced Wednesday, would exclude loans made to veterans from counting toward the MBL cap. Credit unions presently are limited to member business loans equal to the lesser of 12.25 percent of their assets or 1.75 times net worth.

The bipartisan bill was brought by Vicente Gonzalez (Texas-15), Don Young (Alaska-At Large), Paul Cook (Calif.-08) and Tulsi Gabbard (Hawaii-02). It proposes to amend the Federal Credit Union Act to exclude extensions of credit made to veterans from the definition of a member business loan. Supporters said loans made by a credit union to any veteran who served on active duty and was discharged or released under conditions other than dishonorable would be included.

Both national credit union trade associations have supported similar legislation in the past, along with more general efforts to raise the MBL cap. They hailed Wednesday’s action as a chance for CUs to help veterans.

“This bipartisan legislation will make it easier for America’s veterans to access capital and invest in themselves and their communities,” Jim Nussle, president and CEO of the Credit Union National Association, said in a statement.

Brad Thaler, vice president of legislative affairs for the National Association of Federally-Insured Credit Unions, said NAFCU “fought hard” to have this bill introduced in the last Congress, and thanked the four Representatives for their “continued leadership” on the issue.

“This bipartisan bill will improve veterans’ access to necessary capital by removing regulatory barriers that hinder credit unions' ability to meet the financial needs of our nation’s veterans,” he said.

The bill was also lauded by the Defense Credit Union Council, which pushed for the proposal to be introduced in a previous Congress and has made its passage its top legislative priority for 2019.

"We are very pleased with the introduction of this bill" said Tony Hernandez, DCUC's President and CEO. "We look forward to working with Congress and the executive branch to open up additional channels for military members to obtain safe access to business loans so they can participate and build our economy."

Hernandez pledged to continue to work with partner organizations to build consensus for the bill.

Gabbard, a Democratic presidential candidate for 2020, noted that the unemployment rate for military veterans in 2018 was 3.5 percent.

“We can and must do more to empower our veterans as they transition from military to civilian life,” she said. “The Veterans Member Business Loan Act will create opportunities for more veterans to start their own businesses and help reduce unemployment among their fellow veterans as well as in the communities in which they live.”

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