WASHINGTON – The leading banking lobby threatened to pull its support from the JOBS Act if lawmakers added to it a provision for the long-sought increase to the member business loan limit for credit unions.
The American Bankers Association and the Independent Community Bankers Association – nominal credit union allies in recent fights over debit fees and consumer protection – told lawmakers the addition of the MBLs provision would seriously dent their own business lending efforts.
The move came hours after Senate Majority Leader Harry Reid of Nevada said he was convinced of the merits of the MBLs hike and will put the matter to a vote of the Senate, either as a standalone bill or an amendment to another bill. “This is a bill … that presents problems for people because a number of the banks don’t want this to happen,” Reid said. “But I do and I’m going to do everything I can to have this brought before the Senate.”
The proposal would increase the limit on credit union business lending from the current 12.25% of assets all the way to 27%. The current limit is there only because the bankers convinced Congress to add it to HR 1151, the 1998 CU Membership Access Act, as a cost of expanding credit union membership.
The two banking groups expressed opposition to a Senate move that would add the credit union measure to the Jumpstart Our Business Startups Act, a bill aimed at spurring economic growth. In letters to Reid and Senate Minority Leader Mitch McConnell of Kentucky, the ABA and ICBA assailed the MBLs provision as “essentially allowing growth obsessed, complex credit unions to use their tax subsidies to cherry-pick loans that tax-paying community banks willingly make in their communities.”
The bankers also warned the Senate leaders not to include MBLs provision in the JOBS Act. But Reid indicated that Udall’s credit union language would not make it onto that bill.
“Despite credit unions’ claims that this legislation would help small credit unions, nothing could be further from the truth,” said the bankers. “The amendment would benefit a select few credit unions while starving community banks of the loans they use to build revenue to support greater lending efforts locally. It would contribute to the pressures that are forcing many community banks to re-examine their ability to remain independently viable. This would be a terrible result, not just for community banks but for the thousands of local communities they serve.”
