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NCUA approves changes to Texas MBL rule

The National Credit Union Administration board Dec. 15 approved revisions to Texas' member business lending rule that will make it similar to the NCUA's own MBL rule.

States that want to have their own member business lending rule must get NCUA approval.

The NCUA board in February unanimously approved its final rule on member business lending in a move it said was long overdue and that would provide a desperately needed credit source for the country's small businesses. That rule takes effect Jan. 1, 2017.

The Texas rule is written to match the language and structure of the Texas finance code, which includes banking regulations. So, while it is structured differently than the NCUA rule, the Texas rule is substantially similar to it.

NCUA staff said Texas wants to have its own rule because it is a proponent of states' rights and finds it easier to enforce its own rules. One distinction is that Texas has privately insured credit unions, so it must have a rule to cover those institutions.

The Texas member business lending rule will apply to both federally insured and privately insured credit unions chartered in Texas and will become effective Jan. 1, 2017.

Texas was the first state to apply for such a revision since the NCUA finalized the updated MBL rule back in February. NCUA spokesman John Fairbanks said there is another state's application in the pipeline but he was not allowed to identify it.

The Independent Community Bankers of America has filed a lawsuit against the NCUA over the commercial lending rule.