WASHINGTON — As a bill to expand business lending by credit unions nears a vote in the Senate, both sides in the lobbying fight are touting new endorsements.
Proponents of raising the cap on commercial lending got a boost from a consumer group and from a coalition of conservative and free-market organizations, while the bill's opponents in the banking industry gained the support of a credit union that broke with its industry peers.
Unity Credit Union in Warren, Mich., became the second credit union known to oppose the bill, which would raise the cap on business lending from 12.25% of assets to 27.5%. Last week, Glendale Area Schools Federal Credit Union announced its opposition to the measure.
Both rogue credit unions are concerned about their potential liability to the losses of other credit unions engaged in risky commercial lending.
"Our concerns lie with the exposure that this enhanced authority would present to the thousands of credit unions that currently do not participate in business lending," Unity Credit Union Treasurer-Manager Dennis Moriarity wrote in a letter to Senate leaders.
"The exposure is to our reserves and retained earnings which could eventually be confiscated to pay for the mistakes of lenders who are unfamiliar with the complexity of business lending or who might ignore risks in pursuit of revenues."
Meanwhile, the Credit Union National Association touted endorsements from groups generally considered to be on opposite ends of the ideological spectrum.
The Consumer Federation of America endorsed the credit union bill in a letter that touted its potential to create jobs.
"Credit unions are especially deserving of this opportunity," Stephen Brobeck, the consumer group's executive director, wrote in a letter to senators. "They have a strong record of serving consumer and communities, especially moderate-income areas that have been particularly hard-hit by the recession."
The conservative and free-market groups that endorsed the credit union legislation include Americans for Tax Reform, the Competitive Enterprise Institute and Citizens Against Government Waste.
In a letter to Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell, they framed the measure as deregulation.
"While it's true that most credit unions currently do not lend to businesses in a significant way, that is only because the current, burdensome lending cap makes it economically infeasible for them to do so," the groups wrote. "Sensible deregulation would allow many well-capitalized smaller credit unions to expand business lending."
